BSP ‘ready’ amid inflation risks


AS inflation in May 2023 eased to 6.1 percent, the Bangko Sentral ng Pilipinas (BSP) said it “stands ready” to adjust its monetary policy stance to prevent further “broadening of price pressures,” among others.

In a statement on Tuesday, BSP said the easing of inflation to 6.1 percent in May 2023 is within its forecast range of 5.8 to 6.6 percent, consistent with the overall assessment that inflation will remain elevated over the near term before “gradually” decelerating back to target range in the fourth quarter of 2023 in the absence of further supply-shocks.

The BSP cited risks to the inflation outlook for 2023 and 2024 such as the potential impact of El Niño on food prices and utility rates, among others.

“The balance of risks to the inflation outlook for 2023 and 2024 remains tilted to the upside owing to persistent constraints in the supply of key food items, the potential impact of El Niño on food prices and utility rates, as well as the effects of possible additional adjustments in transportation fares and wages,” BSP said in a statement on Tuesday.

Meanwhile, it noted, the impact of a weaker-than-expected global economic recovery “continues to be the primary downside risk to the outlook.” 

With this, BSP said the Monetary Board (MB) will review its assessment of the inflation and macroeconomic outlook in the monetary policy meeting scheduled on June 22,2023.

“The BSP stands ready to adjust the monetary policy stance

as necessary to prevent the further broadening of price pressures as well as the emergence of additional second-order effects,” BSP said. 

Meanwhile, the central bank said it also supports the “timely and effective” implementation of non-monetary government measures to mitigate the impact of persistent supply-side pressures on inflation. 

According to an earlier story of the BusinessMirror, the BSP, moving forward, said it will continue to monitor developments affecting the outlook for inflation and growth. The central bank said it is ready to resume monetary tightening as necessitated by emerging data, consistent with its primary mandate to promote price and financial stability. 

Last May 18, the BSP decided to pause its aggressive monetary policy tightening campaign, noting that inflation is now “firmly on track” to hit the government’s target. 

BSP Governor Felipe M. Medalla said in a press briefing on May 18 that if the current forecast is maintained, the central bank is unlikely to raise [rates] but also reluctant to cut, because “the problem is if the US is raising policy rates and we are cutting, the market seems to see that as a trigger for a significantly weaker peso.” (Full story here:

On Tuesday, the Philippine Statistics Authority (PSA) said the country’s headline inflation slowed to 6.1 percent in May 2023, the fourth consecutive decline for the year. 

PSA data showed that inflation slowed from 6.6 percent in April 2023 but was still higher than the 5.4 percent posted in May 2022. The rate in May 2023 was also the slowest in 12 months, when inflation in May 2022 was at 5.4 percent.