MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) will exit its current monetary easing policy if it sees indications that inflation is picking up.
BSP Assistant Governor Cyd Amador said there were no such signs yet.
“We have already appropriately signaled that we will exit or reconsider the policy settings once we see any signs of significant upturn in inflation expectations,” she told reporters yesterday.
She said for now inflation expectations are “well behaved.”
“This does not only relate to expectations over consumer prices…but we also look at asset prices and once asset prices start misbehaving, which we really don’t see at the moment, we will react,” she said.
Amador said that asset prices are one of the indicators the BSP would look at because this impacts on spending behavior and inflation expectations in general.
“Further easing is still something we determine if it is appropriate. And I think we have already appropriately signaled that we will exit or reconsider the policy settings once we see any signs of significant upturn in inflation expectations,” Amador explained.
Monetary authorities are scheduled to hold another rate setting meeting on August 20.
Early this month, the BSP cut its key policy rates for the sixth time to four percent for the overnight borrowing rate or the reverse repurchase facility and six percent for the overnight lending or repurchase facility.
Headline inflation in June slowed down to 1.5 percent from its year-ago level of 11.4 percent and the 3.3 percent recorded in May, latest data from the National Statistics Office showed.
The June inflation rate was the lowest rate since April 1987.
The 1.5 percent inflation rate in June brought the first half inflation at five percent or slightly above the forecast of the Development Budget Coordination Committee (DBCC) of 2.5 percent to 4.5 percent.