BSP: Higher interest rates to keep inflation in check | Cai U. Ordinario

The Bangko Sentral ng Pilipinas intends to continue raising interest rates as a precautionary measure against the second round effects of inflation.

“Those are signs that inflationary pressures are broadening, and we’re getting to the point where second-order inflation is beginning to be a concern. Until that is addressed, we cannot say-rate hike,’” Medalla told reporters in an interview following a press briefing in Mandaluyong City on Tuesday.to keep high inflation at bay. He added that if, later on, the interest rates were not needed, the BSP could easily roll back the rates.

“I’m not worried about the monetary policy reducing output. What I’m worried about is, if we’re late, and there’d be a greater sacrifice of output later on,” he added. “The supply and distribution of key commodities such as oil and food are still not where they were pre-pandemic. These bottlenecks would keep consumer prices high. The policy response of raising interest rates will eventually affect the demand side of economic activity. How these changing demand and supply patterns manifest in 2023 at the global stage remains to be seen,” Medalla said.

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