PHL ‘may overshoot’ inflation target: BSP | Cai U. Ordinario

GIVEN recent developments, the Bangko Sentral ng Pilipinas said the country may overshoot the inflation target this year.

In terms of its impact on monetary policy rates, Remolona said, there are limits in terms of how much more interest rates can rise. “Usually, the pause is because we wanna reassess and if the data that comes are not quite consistent with each other, and we are scratching our heads [thinking, ‘what really happened’?] then the thing to do is pause. We don’t wanna raise just because we feel like raising, we wanna know why we’re raising. Isn’t that the way it should be,” Remolona said.

“That differential has narrowed by 25 basis points, so normally that weakens the peso. But actually what market participants do is look forward to what will happen in the next few meetings; and looking at the next few meetings it doesn’t look like the differential will narrow further, that is why the peso remains stable despite the hike by the FOMC [Federal Open Market Committee],” he added.

“So we found when we were kinda hawkish in our forward guidance the peso actually—even with the differential narrowing—the peso actually got stronger,” he added.Rice may again be the cause of higher inflation in the coming months as Philippine Statistics Authority data showed that prices returned to levels that were seen prior to the implementation of a law that sought to bring down the price of the staple.

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