Non-monetary actions are important in decreasing inflation pressures in the Philippines, according to the Bangko Sentral ng Pilipinas (BSP).

“The continued implementation of direct non-monetary interventions to ease supply constraints remain crucial in tempering inflation pressures,” the central bank said in a statement released on Thursday.

Price restrictions, decreased import duties on pork and rice, and an increase in meat importation via the minimum access volume were among the government’s earlier non-monetary attempts to mitigate inflationary pressures in recent months.

The BSP went on to say that the newly announced eight-month low inflation rate of 4 percent in July is in line with its forecast that inflation will settle near the high end of the target range of 2-4 percent in the near term before decelerating back to within the target range by the end of the year as the impact of government supply-side measures take effect.

“The balance of risks to the inflation outlook remains broadly balanced over the policy horizon,” it added.

The Bangko Sentral said an increase in international commodity prices due to supply-chain restrictions and a recovery in global demand could put upward pressure on inflation. On the other hand, the discovery of new coronavirus variants, as well as delays in easing lockdown measures, are seen as creating risks to demand and inflation.

The central bank’s policy-making Monetary Board will review its monetary policy stance on August 12 in light of recent pricing developments as well as the second quarter 2021 gross domestic product outturn, the central bank added.

“The BSP remains watchful over the evolving economic conditions and challenges brought about by the pandemic to ensure that the monetary policy stance remains consistent with its price and financial stability objectives,” it said.

BY MEYNARD DELA CERNA