Multilateral organization International Monetary Fund (IMF) said that the current monetary policy stance of the Bangko Sentral ng Pilipinas (BSP) remains appropriate, as its inflation outlook for the Philippines is still within the central bank’s target band.
In a recent press briefing, IMF Resident Representative to the Philippines Shanaka Jayanath Peiris said that the multilateral has raised its inflation outlook for the country this year to 4.4 percent from an earlier estimate of 3.5 percent.
Peiris explained that the IMF’s inflation outlook was based on the supply side factors such as rising food prices, Super Typhoon Yolanda-related factors, higher regional consumer price index and energy price hikes.
For 2015, the IMF representative said that the inflation rate may go down to 3.8 percent, because of the base effects of higher inflation rate in 2014.
“Our inflation forecast is within the range . . . It’s temporary and coming down. It’s fine because it’s a near-term inflation target . . . So at the moment I would say that it [BSP’s current monetary policy stance] is broadly appropriate. Things have not changed. Inflation on the supply side and its temporary,” Peiris said.
The central bank has kept its key policy rates since October 25, 2012, wherein it reduced the interest rate for the Reverse Repurchase Facility from 3.75 percent to 3.5 percent, while overnight lending or repurchase facility was retained at 5.5 percent. Reserve requirement ratios were kept steady as well.