BSP says stagflation not immediate risk to economy

June 16, 2022 - 6:27 PM
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Bangko Sentral ng Pilipinas
The BSP's main building on Roxas Boulevard, (Reuters file photo)

 The Philippines’ central bank does not see stagflation as an immediate risk to the economy and is optimistic recovery will be sustained, its governor said on Thursday.

Central banks across Asia are under pressure to tighten policy rates to tame inflation, though the move risks stunting growth and increasing unemployment.

A steady upturn in credit activity, ample domestic liquidity and improving labor market conditions will help boost economic activity, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said in a statement.

“The BSP will remain vigilant over emerging price and output conditions and will undertake necessary action to ensure that monetary policy settings remain appropriately calibrated,” Diokno said.

The Philippines has signalled another rate increase for its June 23 policy meeting as risks to the inflation outlook tilt toward the upside for both 2022 and 2023.

The central bank last month started unwinding its easy money policy, lifting the overnight reverse repurchase facility rate PHCBIR=ECI by 25 basis points to 2.25%, to combat inflationary pressures. 

—Reporting by Neil Jerome Morales; Editing by Martin Petty and Ed Davies