BSP ready to take “follow-through action” on inflation

July 6, 2018

The Bangko Sentral ng Pilipinas (BSP)  expects inflation, which came in at a higher-then-expected 5.2 percent in June on Thursday, to peak "sometime" in the third quarter before returning to the target 2-4 percent range in 2019.

"The peak will probably occur sometime in the third quarter before converging to the inflation target of  2-4 percent in 2019. The BSP will remain on guard against the risks to the public's inflation expectations and emerging second-round effects. The BSP stands ready to undertake any follow-through action necessary to ensure that inflation expectations are anchored and to safeguard the BSP’s inflation objective," a statement by the central bank said late Thursday.

The BSP had raised policy rates twice in the last two months to stop inflation after it reached 4.6 percent in May.

The BSP said for the near term, inflation is driven by "supply-side factors related to the continued uncertainty in the global oil market, as well as unfavorable weather conditions."

"Seasonal factors, such as the end of rice harvest season and school opening also appeared to have contributed to the current uptick in inflation," the central bank said. DMS