The Bangko Sentral ng Pilipinas is not looking at any off-cycle move amid the higher inflation environment, but another strong monetary action remains on the table, Governor Nestor Espenilla Jr. said Monday.
“We will follow the regular cycle… with strong monetary action,” Espenilla said at the sidelines of the signing of a memorandum of agreement for the expansion of the Negosyo Center Financing Ecosystem between BSP and the Department of Trade and Industry.
Asked on the possibility of another 50-basis-point hike in interest rates in the next policy meeting on Sept. 27, Espenilla said: “We’ll see.”
He said it was too early to tell the impact to the economy and consumer prices of the damage brought about by Typhoon Ompong that hit northern parts of Luzon, which is the biggest rice-producing area in the country.
“Historically, typhoons cause disruptions in supply. But the impact tends to be localized and transitory,” he said.
Latest report from the government said the agricultural damage caused by the typhoon already hit P12 billion, and Espenilla said the board would continue to look closely at this number in relation to their policy decision later this month.
“Also, we have to consider other factors such as compensating imports if any. In any case, we always update our inflation forecast in preparation for each policy review. The updated forecast is an important basis for policy decision,” Espenilla said.
Espenilla the Monetary Board was looking at other measures on the regulatory side to try to curb speculative activities in foreign exchange trading. “We are studying it… because we want to study better how to do it,” he said.
The peso breached the 54-per-dollar level early this month. Espenilla said the Monetary Board was ready to take strong immediate actions to address excessive exchange rate volatility and temper the accelerating inflation.
Espenilla also announced the reactivation of the Currency Risk Protection Program. First introduced in December 1997, the CRPP is a non-deliverable forward hedging facility which is aimed at alleviating demand pressures in the foreign exchange spot market from borrowers seeking to hedge their future foreign exchange exposures.
The peso closed at 54.11 against the US dollar Monday, near a 13-year low. Inflation rate also climbed to a nine-year high of 6.4 percent in August.