The Bangko Sentral ng Pilipinas (BSP), the Philippines’ central bank, is to remain cautious on inflation, even as price gains over the past two months eased from a nine-year high and economic growth slowed to a three-year low last year.
“Even as we continue to see abating pressures on prices, the BSP will remain vigilant and ready to employ monetary responses to keep prices stable and rein in inflation expectations,” BSP Governor Nestor Espenilla said in a speech on Friday evening in Manila that was read by one of his deputies.
Policy responses would be data dependent, timely and appropriate, the speech said.
Reduction in banks’ reserve requirement ratio are to resume in the months ahead along with “further refinements” in the central bank’s interest-rate corridor system, said Espenilla, 60, who has tongue cancer and missed the annual cocktails for the banking community.
Espenilla’s tone remained as cautious as it was on Dec. 5 last year, when he said that “monetary policy will need to stay vigilant to keep inflation under control amid expected strong growth.”
The Philippines raised its policy rate by 175 basis points over five increases last year, its most aggressive tightening in almost two decades, to contain inflation that accelerated to the fastest since 2009.
Monetary authorities are to meet on the policy rate on Feb. 7, after keeping the rate steady at 4.75 percent last month.
Annual inflation eased in November last year and last month from 6.7 percent in October last year, and is this year expected to return to the central bank’s target range of 2 to 4 percent.
Annual growth of 6.1 percent in the fourth quarter was below expectations and expansion was the weakest in three years last year, a report published on Thursday said.
First-quarter growth could be hurt by a delay in the approval of this year’s government budget, Philippine Secretary of Finance Carlos Dominguez said at the event.
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