Inflation rate will be within the 2-4 percent target for 2024 and 2025, according to Bangko Sentral ng Pilipinas Governor Eli Remolona on Tuesday, during the Public Hearing of the Committee on Finance.
“2024 would be between three and four percent, and then 2025 between two and four percent,” the governor said when asked about the assumption for inflation range for 2024 and 2025.
The last reading of inflation is at 4.4 percent in July 2024, due to driving factors such as electricity rates and upward adjustment in domestic prices of petroleum products.The BSP stated that the inflation for July 2024 reading is expected due to higher electricity rates and positive base effects. The central bank projects that the inflation in August will slow down, mainly driven by low import tariffs on rice.
“The balance of risks to the latest inflation outlook has shifted to the downside and this is due largely to the implementation of rice tariff reduction,” Governor Remolona said.
The governor also highlighted that the monetary policy has helped to tame inflation. The BSP has kept its benchmark rate at 6.5 percent since November of 2023.
The governor also stated that there are still risks with the inflation but noted that surveys inflation expectations are well anchored.
“We do still face some upside risks to inflation. These risks will come from higher domestic prices of food items other than rice, from transport charges, and from electricity rates.” Remolona said.
“Nonetheless based on the BSP’s latest surveys inflation expectations are well anchored implying that we have to worry less about 2nd round effects of supply shocks,” he added.
Moreover, when asked regarding the timeline of rate cut, BSP will be looking at the data with the upcoming monetary policy meeting on Thursday. “We are looking very hard at the data, and we don’t have a timeline at this moment, we have a policy meeting on Thursday, and in that meeting, we will look very hard on the data and decide when and how much to move the policy rate,” Governor Remolona said.
