Supply-side inflation does not need monetary response — NEDA chief

MANILA, Philippines — Supply-side driven inflation does not need a monetary response from the monetary board (MB), National Economic and Development Authority Secretary Arsenio Balisacan said.

Balisacan told the reporters on Wednesday that when supply cannot meet growing demand, prices of goods such as rice and the cost of services rise.

“I think that the source of inflation is the supply side and not (the)demand side that requires a monetary policy cure,” Balisacan said.

In recent months, the country has witnessed continuous price hikes in commodities, such as rice and oil, contributing to the spike in the inflation rate.

However, Balisacan is optimistic that inflation numbers will improve and the third quarter economic growth will be better compared to the previous year. 

The Philippines stands in a 6.1% inflation in September, which is higher than the 5.3% inflation on August. 

Earlier, Balisacan, who is not a member of the MB, said that further interest rate hikes can further hurt consumers as the country suffers inflation. 

“There’s really no urgency in creating another round of high-interest rates,...higher interest rates will really put us too far away from our peers in the region,” Balisacan said in an October 5 briefing. 

The Bangko Sentral ng Pilipinas is contemplating an off-cycle increase in its benchmark before its scheduled rate-setting meeting on November 16, in order to stabilize inflation expectations.