MANILA – The Bangko Sentral ng Pilipinas will be “prudent” rather than get swayed by the” implied policy move” of slower than expected inflation in May, deputy governor Diwa Guinigundo said.
Inflation held at its highest level in over 5 years last month, but the 4.6-percent increase in consumer prices was below government and market expectations.
The BSP’s Monetary Board on May 10 raised the benchmark borrowing rate by 25 basis points for the first time since 2014 after April inflation quickened to 4.5 percent. It will meet again on June 21.
“Based on its month on month movement, it appears that the momentum of inflation has further lost steam, sustaining the weaker pace since the beginning of this year,” Guinigundo said in a statement.
“But we shall remain prudent by not immediately abiding by the implied policy move of lower than expected inflation rate based on singular or a few observations,” he said.
With inflation at the low end of forecasts, there is less pressure on the Bangko Sentral to raise rates for a second consecutive policy meeting, said ING economist Joey Cuyegkeng.
“Uncertain second-round effects should keep BSP vigilant,” he said i a statement.
Monetary authorities will be “data dependent” and will consider the “longer horizon” on the prices of oil and other commodities, Guinigundo said.
“The BSP will therefore continue to keep its ears on the ground for any sign of additional price pressures, or whether these could build up into secondary effects in terms of demand for higher wages and increase in transport fare, and promptly undertake appropriate measures,” he said. (ABS-CBN News)
