Medalla: “Despite the normalization of policy settings, our policy rate is still accommodative”
BSP Governor Felipe Medalla said that the central bank’s policy rate is “still accommodative” despite the normalization of policy settings.
According to him, interest rate environment that still has some room for adjustment as the Bangko Sentral ng Pilipinas (BSP) pledged to do all that’s needed to bring down the elevated inflation.
Hours before announcing the latest policy rate settings, he said on Thursday that the central bank’s policy rate is “still accommodative”.
The BSP chief told participants of Finance Philippines 2022 forum on Thursday, September 22, that achieving a target-consistent inflation is “of great importance to us”
“Respectable growth is still possible under these terms, but for the BSP, price stability is the primary concern,” Medalla said. “Of course, we will do what is necessary to achieve a target-consistent inflation path.”
The central bank since May has raised the key rate by 175 bps (basis points), bringing the interest rate to 3.75% as of August 18. The policy meeting on September 22 is expected to increase the key rate anew by 50 basis points.
The BSP chief said that the policy rate is still low at this level.
“Our policy rate is still lower than it used to be. If you compare policy rate to inflation, the real rate is still negative,” he said.
Medalla has said that inflation will likely peak in September or October 2022. Based on a report, headline inflation year-to-date is “at 4.9 percent average” as of end-August.