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September 28, 2022

BSP supports targeted, not blanket government intervention on prices

The monetary authorities on Thursday would rather that government respond to elevated farm product prices in a target-specific manner instead of wholesale.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno bared this in a statement following the quarter-point increase in the so-called Federal funds rate by the US Fed and the quiet refusal of Finance Secretary Carlos G. Dominguez to suspend the excise tax collection that contributed to commodities price increases.

“While we observed few occasions of upticks emanating from supply constraints and rising producer costs, we note that the impact of supply disruptions brought about by natural calamities were short-lived and were mitigated by government measures, such as early harvest of crops and close price monitoring conducted by concerned agencies,” said Diokno.

According to him, targeted interventions “help ease pressure on agri prices.”

He noted the impact of weather disturbances on agri prices are often temporary and respond to measures such as early harvests and close monitoring.

He also said non-monetary measures also helped, such as increasing the supply of basic commodities, including meat, rice, corn and vegetables which are weather-sensitive products.

Temporary import increases also helped.

“The BSP remains on the lookout against inflationary pressures that could disanchor inflation expectations. Given that inflation is projected to move close to the upper end of the government’s 2-4 percent target range in 2022, we remain vigilant of potential upside risks to the inflation outlook, particularly higher global food prices, the continued shortage in domestic pork supply, and higher fish prices. The BSP is also closely monitoring for possible second-round effects arising from higher oil prices,” Diokno said.

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