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Be wary of upside inflation risk from rising oil prices, BSP told
UK-based think tank Pantheon Macroeconomics advises the Bangko Sentral ng Pilipinas (BSP) not to be complacent about inflation risks stemming from rising global oil prices.
Pantheon Macroeconomics expressed skepticism regarding the BSP's perceived overconfidence in the inflation outlook, especially after the Monetary Board maintained the policy rate at a record-low of 2 percent.
The BSP revised its 2021 inflation forecast downwards to 3.9 percent from 4.2 percent, citing lower-than-expected inflation readings in recent months.
However, Pantheon Macroeconomics argues that this moderation was largely due to temporary measures like the meat price cap, which has since expired.
Furthermore, the think tank questions the effectiveness of reduced tariffs on imported pork, noting that global pork prices are also increasing due to high demand, particularly from China.
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