BSP believes ''economic recovery is robust enough to absorb further tightening as necessary''
Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla said Thursday he believes ''economic recovery is robust enough to absorb further tightening as necessary.''
Medalla made this comment after the BSP raised policy rates by 50 basis points to inflation. This brings policy rates to 3.75 basis points, up 1.75 basis points.
The Development Budget Coordinating Committee forecast growth for 2022 at 6.5 to 7.5 percent.
Medalla said the BSP forecasts headline inflation '' will increase and will probably peak on the 10th or the 11th month of the year.'' He added that ''only in the second half of next year that headline inflation will be closer to 3 than 4 (percent.'
''The BSP’s latest baseline forecasts have shifted higher for 2022, with average inflation projected to breach the upper end of the 2-4 percent target range at 5.4 percent,'' the Monetary Board said in a statement.
''Upside risks also continue to dominate the inflation outlook up to 2023 due to the potential impact of higher global non-oil prices, the continued shortage in domestic fish supply, the sharp increase in the price of sugar, as well as pending petitions for transport fare increases,'' it added.
Medalla said he prefers ''6.5 percent growth to six percent. But six percent is not so bad, right?''
''So that is the choice between high inflation and…between us not meeting our inflation target and reducing the growth rate of GDP slightly. I go for, of course, price stability, since price stability is one of our three pillars,'' he added. DMS