Inflation might have hit as much as 8.3% last month, the Philippine central bank said, faster than the 14-year record of 8.1% in December.
Her household costs have increased as her four children in Grade 4 to second year college started attending face-to-face classes amid decreasing coronavirus infections. “Commodity prices would continue to rise, and there’s nothing I can do about it,” she said by telephone in Filipino.
“We could see the effects of higher borrowing costs on exchange rates and demand for securities,” she said. “As interest rates in the US continue to rise, investors are moving their money to US securities to take advantage of higher yields. The increased demand is then causing the dollar to strengthen further against other currencies.”
“BSP policy actions do not impact inflation or prices per se, but they do impact economic growth indirectly,” he said. “By adjusting settings, the BSP is affecting liquidity, which is oftentimes referred to as the lifeblood of the economy.” The effects of monetary tightening are not directly felt because it merely sets into motion a series of events that would likely lead to slower growth, he said. Only then will inflation slow.
He added that as the central bank adjusts the ceiling on credit card charges, there could be a similar slowdown in purchases.
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