Monetary policy remains appropriate — Diokno

The consumer price index rose 4.5% last month, slower than the 4.7% in February but beyond the central bank’s 2-4% target. — PHILIPPINE STAR/ MICHAEL VARCAS

THE Bangko Sentral ng Pilipinas’ (BSP) accommodative monetary policy stance remains appropriate to support the economy’s recovery, officials said, vowing to keep a close eye on inflation.

“Looking ahead, the BSP will continue to look closely in the near term for signs of inflation becoming broader based in order to safeguard the public’s inflation expectations,” BSP Governor Benjamin E. Diokno said at a virtual briefing.

“The overall stance of monetary policy will remain oriented towards preserving ongoing policy support and helping to ensure the sustainability of economic recovery, while also guarding against emerging threats to the BSP’s price and financial stability objectives,” he added.

BSP Deputy Governor Francisco G. Dakila said the March inflation figures were in line with the central bank’s baseline projection.

The consumer price index rose 4.5% last month, slower than the 4.7% in February but beyond the BSP’s 2-4% target.

The central bank expects inflation this year to average 4.2%, but stressed major upside risks were mainly due to low supply of some commodities such as meat.

“We don’t see inflation going beyond 5% at any time during that [inflation] path [for 2021],” Mr. Dakila said.

BSP Department of Economic Research Senior Director Zeno R. Abenoja said upside risks to inflation include tighter supply of meat products and the improving global economic prospects.

On the other hand, factors such as the increase in coronavirus infections and the challenges to the vaccination program could slow inflation, Mr. Abenoja said.

In March, the BSP kept the key policy rate steady at a record low of 2%.

The Monetary Board’s next policy-setting meeting is set on May 13. — Luz Wendy T. Noble