The Philippines may miss its inflation target for a third straight year in 2024 as price pressures build, according to the minutes of the central bank’s September meeting where authorities emphasized they can resume tightening if needed.
“The risks to the inflation outlook are still tilted to the upside for 2023 to 2025, and may trigger a possible breach of the inflation target in 2024,” the Bangko Sentral ng Pilipinas said in minutes of its September 21 meeting when it kept the benchmark rate unchanged for a fourth consecutive time.
The central bank is aiming for inflation at 2% to 4%, but the target was missed last year and is poised to be breached again this year. The BSP’s 2024 inflation forecast was raised last month to 3.5%, nearing the target’s top end, from a previous estimate of 3.3%
While monetary authorities opted to keep the policy rate at 6.25% last month, the BSP is focused “on resuming monetary policy tightening action” to respond to inflation risks and prevent spillover effects, according to the minutes released on Thursday. Among the major price risks are transport and power costs, it said.
The statement mirrors BSP Governor Eli M. Remolona, Jr.’s hawkish signals in the past weeks, saying that he’s open to raise the policy rate by 25 basis points on or before the November 16 meeting after price risks materialized. The key rate stands at a 16-year high after 425 basis points of rate hikes since May last year — among the region’s most aggressive policy tightening. — Bloomberg