BSP: More economic improvements are expected
As the economy struggles to recover from the effects of the epidemic, an analyst predicts additional stimulus measures from the Bangko Sentral ng Pilipinas (BSP).
Senior economist Nicholas Mapa of ING Bank Manila stated in a study that he expects the central bank to maintain its accommodating posture until 2022, “given forecasts that the economy would be stuck in low gear during the second half of the year.”
“(BSP) Governor (Benjamin) Diokno did indicate that if the economic forecast is endangered further, the BSP may delve deeper into its policy toolbox and/or prolong its pause for longer. Despite a slight failure on the inflation goal, it seems that the leaning is potential for even greater support from the BSP,” he added.
The BSP’s policy-making Monetary Board raised the central bank’s average inflation projections for 2021-2023 by one percentage point in each year, to 4.1 percent for this year and 3.1 percent for 2022-2023, during its rate-setting meeting on Thursday.
The effect of rising global commodity prices as economies recover was blamed by monetary authorities for the rise in average inflation projections for the next three years.
According to them, the country’s pace of price rises peaked in February at 4.7 percent before slowing to 4 percent in July.
However, average inflation in the first seven months of this year was 4.4 percent, which is still higher than the government’s goal range of 2% to 4%.
The high inflation rate is expected to continue through the end of the current quarter, according to monetary officials.
“We anticipate the BSP to look beyond the possible inflation goal violation, with the probability of preemptive recalibration being extremely low at this point,” Mapa said.
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