Philippine Central Bank Sees No Need to Act Yet on Inflation
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With inflation in the Philippines at multi-year highs, Governor Benjamin Diokno said there’s no need for the central bank to act yet to control price pressures as domestic demand remains weak.
Data due Friday is likely to show consumer prices rose 4.7% in February from a year earlier, according to a Bloomberg survey. That’s quicker than January’s 4.2% print, which was the fastest in two years.
“We thought it does not require a monetary response at the moment,” Diokno said in an online briefing Thursday. Amid tepid demand, the factors driving price gains are mostly supply-related, and inflation expectations “remain well-anchored,” he said.
Inflation may stay above 4% in coming months before tapering in the second half of the year, the governor said. Policy makers are “confident” average inflation will be within the bank’s 2%-4% target range this year and next, he said.
Speaking at the same briefing, central bank senior director Zeno Abenoja said monetary policy “can’t influence inflation in the near-term,” so the authority considers the price outlook for the coming two years when setting policy.
Diokno said the central bank is looking at whether price pressures will fuel higher wages and transport costs.
He also said the central bank is monitoring companies’ balance sheets, as the pandemic left “adverse effects” on businesses, even as earnings are expected to bounce back this year.
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