The Bangko Sentral ng Pilipinas (BSP) will continue to improve the way it tracks economic activities in the regions for a more targeted approach on ensuring price and financial stability and an appropriate monetary policy response, according to its highest-ranking official.
“(The) issue of elevated food prices is actually more pronounced in some regions than in others. Moreover, developments at the regional level also inform the way we carry out our first and second pillars – price stability and financial stability,” said BSP Governor Felipe M. Medalla on Wednesday, Jan. 18, during the BSP's 4th Regional Macroeconomic Conference Series (RMCS).
Medalla said that it “would be remiss for the central bank to overlook such nuances and differences across regions to inform its policies”.
The RMCS which will later present policy recommendations after the sessions, will “equip” the BSP with “the right tools to make better decisions and more targeted actions” since the regions have first-hand knowledge and experience of what is happening on the ground, said Medalla.
The RMCS on Wednesday tackled South Luzon issues. Previous series conducted were in Central Visayas, Davao and SOCCKSARGEN, North and Central Luzon.
The South Luzon leg discussed recent economic developments and general banking system developments including the regional numbers.
According to Medalla, “while the central bank is among the more credible institutions when it comes to taking a macroeconomic view – focusing on aggregated data like GDP, price index and capital formation at the national level – one must never forget to look at regional-level data.”
On a yearly basis, the BSP releases a report on Regional Economic Developments which focuses on the demand and supply conditions, price developments and monetary conditions, as well as the emerging outlook. The latest regional report was July 2022.
The BSP said the analysis of regional trends and developments supplements BSP’s analytical tools for monetary policy formulation and financial supervision. It also noted that the qualitative and quantitative information used in the report are collected from primary and secondary sources and reflect the extensive information gathered by the BSP regional offices and branches.
Using regional trends as well as on the national level, the BSP continues to assess that in the medium-term, inflation will start to lose its steam after peaking in December at 8.1 percent, for a full-year average of 5.8 percent. The 5.8 percent 2022 rate is on point with the BSP’s own estimates.
The BSP said inflation will decelerate in the succeeding months due to easing global oil and non-oil prices, negative base effects, and as the impact of BSP’s cumulative 350 basis points (bps) policy rate adjustments work its way to the economy.