BSP’s sloth-like pace apparent

While admitting that the Bangko Sentral ng Pilipinas (BSP) may already be “behind the curve,” Governor Eli Remolona Jr. and the Monetary Board, these overpaid officials who control our monetary system, are thinking of acting now or waiting until their next regular meeting.

They are still considering an off-cycle hike in interest rate, Remolona said.

Meanwhile, the Filipinos are reeling under a 7.2 percent scaling up of consumer prices.

Remolona said the May inflation data due June 5 would be a key input for the Monetary Board’s next policy decision, scheduled for June 18.

“We’re considering it,” he said when asked about the possibility of a rate hike outside the regular policy cycle.

Already, consumer prices rose 7.2 percent from a year earlier in April, the fastest pace in three years, as higher energy costs tied to the war in West Asia quickly spilled over to other household essentials.

The April surge marked the second straight month inflation breached the central bank’s 2 percent to 4 percent target range. In response, the Philippine central bank raised its key policy rate by a quarter point to 4.5 percent at its April 23 meeting amid a “deteriorating” inflation outlook.

The central bank said inflation may average 6.3 percent this year and 4.3 percent in 2027. Policymakers said they were “committed to fulfilling its primary mandate of slow inflation and will take necessary actions to ensure inflation returns to its 3-percent target within a reasonable time.”

On the continued weakness of the peso, Remolona said that while the depreciation could fuel inflation, it could also boost Philippine exports and help narrow the country’s trade deficit.

“Our exports do need help because we’re facing a current account deficit,” he said. “So, we can’t allow this kind of deficit to persist forever. And a weaker peso helps narrow the gap. But we’re not trying to seek a level for the peso.”