THE BANGKO SENTRAL ng Pilipinas (BSP) has room to raise rates without derailing economic recovery, the International Monetary Fund (IMF) said.
A woman buys grocewries at a supermarket in Quezon City, March 4. — PHILIPPINE STAR/ MICHAEL VARCASPilipinas has room to raise rates without derailing economic recovery, the International Monetary Fund said.
Inflation rose 6.1% year on year in June, exceeding the central bank’s 2-4 target band for a third straight month. The average inflation rate in the first six months is 4.4%, still below the BSP’s full-year forecast of 5%. “In particular, BSP is prepared to raise its policy rate by 50 bps by August. The BSP is ready to take further policy actions, if needed,” Mr. Medalla said.The IMF’s Mr. Gudmundsson said monetary policy tightening and supporting economic growth “are compatible, not least in terms of ensuring the sustainability of growth.”
He noted the Philippines is “well-positioned to withstand external shocks,” as its economy is one of the fastest-growing in the region and has adequate foreign exchange reserves. The DBCC on Friday said the average inflation rate assumption was raised to 4.5-5.5% for 2022, from 3.7-4.7% previously, reation to ease to 2.5-4.5 % in 2023, before returning to the 2-4% target range starting 2024 to 2028.
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