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BSP Maintains ‘Sufficiently Tight’ Policy Settings Amid Inflation Deceleration

Manila – Despite a slowdown in the inflation rate, the Bangko Sentral ng Pilipinas (BSP) has declared its intention to maintain ‘sufficiently tight’ policy settings. The Philippine Statistics Authority (PSA) reported that the inflation rate decelerated to 4.1 percent in November from 4.9 percent the previous month, primarily due to slower price increases in the heavily-weighted food index.

According to Philippines News Agency, The BSP stated that the November inflation rate aligns with its forecast range of 4 percent to 4.8 percent for the month. The latest inflation data is consistent with the BSP’s expectations of a near-term moderation due to easing supply-side pressures and negative base effects. The 11-month average inflation rate now stands at 6.3 percent, lower than the 8 percent recorded in the same period last year.

Monetary authorities remain optimistic that inflation will return to the government’s target range of 2 percent to 4 percent next year. However, the BSP cautions that risks to the inflation outlook lean towards the upside, citing potential impacts from higher transport fares, power rates, international oil prices, and a greater-than-expected minimum wage increase outside the National Capital Region. These factors are expected to be mitigated by the global economy’s weaker-than-expected recovery and government measures to address the impact of the El Niño phenomenon on agriculture.

The BSP emphasizes the necessity of maintaining tight monetary policy settings until a sustained decline in inflation is evident. The central bank will continue monitoring inflation expectations and second-round effects, ready to take appropriate actions to ensure inflation returns to the target range, in line with its mandate to maintain price stability.