It’s too soon to declare victory.
This was what Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said about the recent slowdown in inflation during a reception for the banking community to mark its 30th anniversary on Friday night.
Remolona said core inflation—which measures the “underlying trend or movement in the average consumer prices”—remained high. Core inflation was at 7.4 percent in June and averaged 7.7 percent in the first six months of the year.
“It’s too soon to declare victory. Core inflation remains high. There are still upside risks to inflation. For example, risks in the form of El Niño and further supply shocks. We will wait and see,” Remolona said.
Remolona said inflation data that will be released by the Philippine Statistics Authority (PSA) in the first week of August would be included in the analysis of the Monetary Board that will determine its decision on policy rates.
Inflation is one of three challenges of the central bank mentioned by Remolona on Friday. The other two are the payment system and banking supervision.
Remolona said, however, the BSP is making headway in terms of payment systems. He said the BSP will rely on the “magic of digitalization” to meet its target of raising to 70 percent the ratio of Filipinos with bank accounts.
He said banking supervision is still a challenge, even as he reiterated his earlier observation that the banking system is strong and was part of the solution in the speedy recovery from the pandemic.