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THE
Bangko Sentral ng Pilipinas (BSP) has again tapped the
International Monetary Fund (IMF)and other multilateral
financial institutions for policy advice in the war
against inflation.
BSP
Governor Amando Tetangco Jr. bared the renewed ties
Tuesday as he recognized the complexity of the problems
the Monetary Board faces every day in crafting policy
decisions.
“The
environment we are in continues to evolve. This is a
dilemma faced by all practitioners of monetary policy,
specifically those who are on the ground and making the
hard decisions every day,” Tetangco said in an e-mail.
He said
“consistency in environmental assessment” was important,
and for this reason the IMF and similar international
organizations were tapped for policy advice.
“The
environment we are in is indeed more challenging than
[in] the past. The main factors that continue to impact
strongly on inflation are supply-side volatilities,
which make it more difficult to pin the inflation path
down,” he said.
This
pertains to the forecast that inflation would soar to a
double-digit level this month from last year’s 2.8
percent.
The
average inflation in the first five months reached 6.9
percent. Food- and oil-price increases pushed inflation
higher from 4.9 percent in January to 9.6 percent in
May.
Tetangco
previously said inflation in June would hit “the low
teens.”
On
Tuesday he said the current outlook on the buoyancy of
domestic demand gives the BSP “room for a measured
policy response.”
The
phrase has been translated by economists to mean similar
rate hikes down the line when warranted.
“The
Monetary Board is ready to undertake further action as
necessary to ensure the achievement of the BSP’s price
stability objective,” he vowed.
Together
with colleagues at the seven-man Monetary Board,
Tetangco has pushed the monetary-policy settings 25
basis points higher as supply-side restrictions began to
spill over to the demand side.
Supply-side pressures, as food and oil price increases,
do not respond to monetary-policy adjustments like
interest-rate hikes.
Tetangco
formally bid goodbye to decades of financial assistance
from the IMF in April 2007 when its final non-loan
postprogram monitoring arrangement finally lapsed. Prior
to that,
Manila
frequently needed IMF assistance in the form of loans to
support its balance-of- payments requirements. |
