Inflation expectations anchored – Remolona
MONETARY authorities have been able to keep inflation expectations anchored amid concerns that consumer price growth could spiral out of control, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said.
This was due to the use of «more data, more different kinds of data,» Remolona said during the Philippine Economic Briefing in Iloilo on Monday.
Monthly inflation, which hit a 14-year high of 8.7 percent in January this year, moderated to 4.1 percent in November, just above the BSP's 2.0- to 4.0-percent target.
The BSP's policymaking Monetary Board embarked on a tightening spree last year as inflation surged in the wake of Russia's invasion of Ukraine.
Rate hikes totaling 450 basis points (bps), the last an off-cycle 25-bps increase last October, have raised the BSP policy rate to 6.5 percent the highest since 2007.
With inflation having slowed in the last two months, analysts believe the Monetary Board will pause anew when it meets for the last time this year on Thursday.
Remolona said that monetary authorities were striving to avoid unnecessary tightening and had employed strategies such as forward guidance to keep inflation expectations under control.
«Monetary policy had to use some judgment,» he added.
«When it comes to expectations, we need more data on expectations, we need more surveys. The idea was to prevent our inflation expectations from becoming unanchored,» Remolona continued.
The BSP shifted to inflation targeting in 2002 and the current declared goal is that of keeping consumer price growth to within 2.0-4.0 percent. The target is supposed to be supportive of economic growth and policies are adjusted to keep inflation within the range.
«That's what we're doing with monetary policy. We've been watching inflation expectations closely,» Remolona said.
«We're making forward guidance, we've been telling the markets this is what we're gonna do in the next few meetings, to help anchor expectations and reduce second-round effects,» he added.
