Philippine Finance Secretary: Central Bank has “Done Enough” Policy Tightening
Introduction: Philippine Finance Secretary Benjamin Diokno believes that the central bank has taken sufficient measures to address inflationary pressures in the country. However, he emphasizes that future interest rate adjustments will depend on data and remain data-dependent. This sentiment is shared by the economic planning minister, who suggests that further rate hikes may be unnecessary due to inflation being driven by supply-side factors. Despite this, the country’s inflation rate has risen to 6.1% in September, well above the central bank’s target range of 2%-4% for the year.
Central Bank’s Efforts to Tame Inflation
The Philippine Finance Secretary, Benjamin Diokno, stated that the central bank has implemented sufficient policy tightening to address the rising inflation. He noted that there has been some moderation in underlying price pressures, as core inflation (which excludes volatile food and energy prices) slowed to 5.9% in September from 6.1% the previous month. Diokno expressed confidence in the effectiveness of the central bank’s measures, stating, “We have done enough,” during a news conference on Friday.
Future Interest Rate Moves Remain Data-Dependent
Diokno reiterated that future interest rate adjustments will depend on the data. The Bangko Sentral ng Pilipinas has maintained its benchmark interest rate at 6.25% for the past four meetings. The central bank stated that it is ready to resume tightening as needed. The upcoming meeting on November 16 will review policy decisions following the release of the Philippines’ third-quarter growth data on November 9. Economists speculate that the higher-than-expected September inflation rate might prompt the central bank to resume rate hikes next month.
Positive Outlook for Economic Growth
Despite the inflation concerns, Diokno expressed optimism about the country’s economic growth in the second half of the year. He anticipates faster growth compared to the first half’s 5.3% expansion. This projection is supported by an expected increase in infrastructure spending during the last quarter. The Philippine government has set a growth target of 6.0-7.0% for 2023.
Conclusion
The Philippine Finance Secretary’s belief that the central bank has implemented sufficient policy tightening to address inflationary pressures offers reassurance to the country’s economy. While future interest rate adjustments will depend on data, the central bank remains ready to resume tightening if necessary. With a positive outlook for economic growth in the second half of the year, the Philippines aims to achieve its growth targets and mitigate inflationary concerns.
