MANILA – The monetary board will focus on price pressures and global developments that may affect domestic inflation as they revisit the country’s policy setting today.
“We’d like to see the extent of the brewing pressures that we have seen lately on inflation. Since these are supply-side factors, we’d like to assess the potential second-round effects that can come out from these price pressures,” Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. told reporters.
The country’s rising food prices, the recent transport fare hikes, climbing power rates, and also the possible wage increase are among the price pressures that will be discussed.
He added that the meeting will also focus on several issues that affect inflation and domestic liquidity as well as the economy in general.
“What we’re looking at is that the growth of liquidity does not in the future cause pressures that can lead to issues on financial stability as well as potential inflationary pressures coming from the demand side,” Tetangco explained.
The BSP will also be tackling other factors which may affect the country’s economy such as the international economy and events happening outside the country.
Tetangco added that the country’s financial market volatility is susceptible to events happening outside the country.
The US Federal Reserve’s tapering of stimulus, for instance, may greatly affect market volatility.
“We will consider all these things consistent with the approach under the inflation-targeting framework… We would try to form a view as to the path of future inflation and how these will likely be affected by all of these things,” Tetangco said.
“Given the pressures, I would think that there would be an upward adjustment in the inflation forecast … but the general view is that inflation will still remain within the target range but closer to the upper end of the range,” Tetangco added.