BSP Governor Felipe Medalla Indicates Pause on Policy Rate Hikes
FILE PHOTO: Bangko Sentral ng Pilipinas Governor Felipe Medalla poses for a photograph in his office at Manila, Philippines, November 18, 2022. REUTERS/Eloisa Lopez
MANILA – Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla hinted at a continued pause on policy rate hikes this week, citing the decreasing inflation rate across the Philippines. Medalla stated that maintaining the BSP’s benchmark rate for the second consecutive policy meeting on June 22 seemed to be the best strategy. The rate of price increases for commonly purchased goods and services by households has steadily declined from 8.7 percent in January to 6.1 percent in May. The inflation rate for May 2023 has further slowed down to 6.1%.
The BSP chief emphasized the importance of achieving a monthly inflation rate below 4 percent by the end of the year, with inflation stabilizing at around 3 percent next year. However, Medalla acknowledged that unforeseen factors could impact the actual inflation rate. He also mentioned that private-sector analysts, including ING Bank, Goldman Sachs, Rizal Commercial Banking Corp., Security Bank Corp., and Pantheon Macroeconomics, are expecting the BSP’s Monetary Board to maintain the policy rate this week.
Economic managers of the state have reiterated that despite the easing of inflation in May, El Niño remains a significant concern that the government is addressing. El Niño increases the likelihood of below-average rainfall, potentially leading to dry spells and droughts in certain regions of the Philippines. El Niño is expected to develop in the coming months and may persist until the first quarter of 2024.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
