Green light for monetary tightening in the Philippines

PHILIPPINES - In Brief 09 Oct 2023 by Diwa Guinigundo
As approved by the Philippines’ Land Transportation and Regulatory Board (LTFRB), a provisional increase of P1 took effect yesterday for public utility jeepneys nationwide. This brings the minimum jeepney fare from P12 to P13 for traditional type and from P14 to P15 for the modern version. LTFRB admitted that such an approval is a stop-gap measure in view of the last 11 increases in the prices of fuel products.  While the country’s National Economic and Development Authority (NEDA) “has yet to study the proposal for (it) to provide more accurate finding,” the Bangko Sentral ng Pilipinas (BSP) had identified transport fare adjustment as one of the dominant upside risks. With its implementation starting yesterday, the jeepney fare increase could have further inflationary consequences, not the least of which is the possible upset of inflation expectations. In addition, what could further lead to elevated inflation print is the Wage Order RBill-24 that mandates a P40 increase in the daily minimum wage of workers in private establishments in Central Luzon, a major contributor to both output and inflation dynamics. This will be enforced starting next week, October 16. All these will bolster our initial view that while the BSP could choose to keep its hawkish stance by maintaining its policy rate at 6.25% against its latest forecasts of 5.8% and 3.5% for 2023 and 2024, respectively, these are mounting motivations for an ultimate resumption of monetary tightening. What could only pull back BSP from deciding to resume another series of policy rate increases is the weak economic growth. This will be an unpopular decision. But the Philippines’ GDP continues to grow while demand p...

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this or its contents.