THE BANGKO SENTRAL ng Pilipinas (BSP) might remain cautious as a growth slowdown amid mounting inflation risks from a volatility-driven peso depreciation and record-high wage hike tests its credibility, GlobalSource Partners said.
In a report dated July 20, GlobalSource Partners Principal Advisor Diwa C. Guinigundo noted that the Philippines will face twin inflation shocks from a weakening peso amid fluctuating oil prices and the dual-tranche wage hike in the National Capital Region (NCR).
“The Philippines is facing two simultaneous inflation shocks: a larger-than-expected wage increase and renewed external pressures from volatile oil markets and a weaker peso,” Mr. Guinigundo said.
“Together, these could delay the return of inflation to target, underscoring the importance of maintaining credible monetary policy and keeping inflation expectations well anchored while addressing the structural sources of inflation through broader government action,” he added.
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