BSP not in a hurry to pause rate hikes
Felipe Medalla —BSP PHOTO
MANILA -Monetary policymakers in the Philippines still need to look at upcoming April inflation data to see whether interest rate hikes could pause in the May meeting of the Monetary Board (MB), according to Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla.
Medalla, who is also MB chair, noted in an interview with Bloomberg TV that while year-on-year inflation has eased significantly, they were more closely monitoring the month-on-month changes in the pace of increases in prices of goods and services that households commonly purchase.
Headline inflation slid down to 7.6 percent in March from a 14-year high of 8.7 percent in January.
On the other hand, core inflation—which excludes goods and services whose prices change relatively more quickly, such as food and energy—has gone up to a 24-year high of 8 percent in March.
Medalla said that while food prices have been easing, policymakers are now watching out whether second-order effects will follow suit.
The BSP chief was referring to increases in items that absorbed the ripple effect of the shocks, or spikes in food and fuel prices, such as transportation and wages.
Medalla said they were beginning to see signs that second-order effects were also easing on the month-on-month data.
“[Price hikes of] most products, except for a few, are now consistent with the BSP’s projection that inflation will be back within the range of 2 percent to 4 percent in 2024,” he added.
When asked whether two months of slowing inflation would mean a pause in interest rate hikes, Medalla said this was not enough to make a trend.
“Probably we need another month of data,” he said. INQ
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