Philippines central bank to stay cautious on inflation

Bloomberg

The Philippines central bank will remain cautious on inflation even as price gains eased from a nine-year high in the past two months and economic growth slowed to a three-year low in 2018.
“Even as we continue to see abating pressures on prices, the BSP will remain vigilant and ready to employ monetary responses to keep prices stable and rein in inflation expectations,” according to a speech by Bangko Sentral ng Pilipinas Governor Nestor Espenilla in Manila that was read by one of his deputies. Policy responses will be data dependent, timely and appropriate, the speech said.
Reduction in banks’ reserve requirement ratio will resume in the months ahead along with “further refinements” in the central bank’s interest-rate corridor system, said Espenilla, 60, who’s been battling tongue cancer and missed the annual functions the agency hosted for the banking community. He had been on intermittent leaves since September last year
for treatment.
The speech was the first remarks this year from the governor of a central bank known for openly communicating its policy direction. Espenilla’s tone remained as cautious as it was on December 5 when he said that “monetary policy will need to stay vigilant to keep inflation under control amid expected strong growth.”
The Philippines raised its policy rate by a total of 175 basis points in five increases last year, its most aggressive tightening in almost two dec-ades to contain inflation that accelerated to the fastest since 2009.