PH central bank says to keep policy tight despite an easing in inflation

Onions are displayed at a stall at a public market in Manila, Philippines, Jan 28, 2023. REUTERS/Lisa Marie David/File Photo

MANILA  -The Philippine central bank said on Tuesday it was necessary to keep monetary policy settings “sufficiently tight” and it was ready to take further action, highlighting its wariness of inflation despite a slowdown in the pace of increases.

The consumer price index climbed 4.1 percent in November, the lowest rate of growth since March 2022 and less than the 4.3 percent forecast in a Reuters poll. Inflation was 4.9 percent in October.

READ: PH inflation slows further, moves closer to target

The data from the Philippine Statistics Authority also showed food inflation at 5.8 percent in November, the slowest annual rise since May 2022. Though rice prices increased to 15.8 percent from 13.2 percent, there were declines in the cost of vegetables.

“The Monetary Board deems it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident,” the Bangko Sentral ng Pilipinas said in a statement.

Average inflation for the year to date was 6.2 percent, still far above the central bank’s 2 percent-4 percent target for the year.

The central bank said it is prepared to take appropriate action as needed to bring inflation back to its target range, adding that the balance of risks in the inflation outlook still leans significantly towards the upside.

READ: BSP keeps rates steady

Core inflation, which strips out volatile food and energy costs, was at 4.7 percent in November versus 5.3 percent the previous month.

The central bank, which meets for the last time this year on Dec. 14, kept interest rates steady at 6.5 percent at its meeting in November, after an off-cycle 25-basis point hike on Oct. 26 amid worries that inflation could spiral out of control.