BSP Gov. Benjamin Diokno (File photo by EARVIN PERIAS / Philippine Daily Inquirer)
The country’s central bank chief on Monday announced a pause in monetary easing in the last two months of 2019 to allow a string of liquidity-injecting policies made in recent weeks to work their way through the economy.
In a television interview, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said “there will be no more policy cuts this year and no more relaxation of the reserve requirement.”
In response to the downtrend in the inflation rate this year, the central bank had reduced its key overnight rate by a total of 75 basis points over several policy meetings of the Monetary Board and authorized a combined 4-percentage points reduction in the amount of cash banks were required to keep in their vaults — the last one being announced only two weeks ago and meant to take effect early December.
This aggressive monetary policy easing stance was made possible by the steady downtrend in the inflation rate this year, although the central bank expected prices to move slightly higher during the Christmas spending season.
For October, cheaper petroleum and rice—two of the top drivers of inflation—are likely to restrain the consumer price index to an even slower pace versus the already low level reported in the previous month, the central bank said.
BSP economists expected the inflation rate for last month to settle within the 0.5-1.3 percent range. This was slightly lower than the 0.6-1.4 percent range that the central bank’s economists forecast for September where the official number was disclosed at 0.9 percent a few days later.
The government will release official inflation figures today, Nov. 5.