BSP to wait for clearer signals before acting

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April 11, 2026 | 12:00am

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is taking a cautious, wait-and-see stance ahead of its April 23 policy meeting, with Governor Eli Remolona Jr. signaling that any move will depend on clearer evidence of second-round inflation effects from the ongoing global oil shock.

In an interview with CNBC, Remolona said the BSP deliberately held off from immediate policy action as it weighs the tradeoff between rising inflation and weak economic growth.

“Given that we were facing a global supply shock, there was very little we can do about that… we didn’t want to make that worse,” he said. “We needed a few more weeks to be clear about what needed to be done.”

He said that by April 23, the Monetary Board would “have a much better sense of where we stand,” as policymakers assess the latest inflation data, particularly the March print that came in above the BSP’s forecast range.

March inflation accelerated sharply to 4.1 percent from 2.4 percent in February, breaching the BSP’s 3.1 to 3.9 percent forecast range and moving above the upper end of its two to four percent target band.

Despite the surge, Remolona emphasized that monetary policy remains less effective against supply-side shocks, as the BSP’s tools are primarily designed to manage demand.

“For inflation, we usually weaken demand by tightening monetary policy. And that would not have a lot of effects in the face of a supply shock,” he said.

Instead, the BSP is closely watching for spillover effects, particularly signs that higher oil prices are feeding into broader price pressures and consumer behavior.

“We’re waiting for spillover effects onto demand. When those effects appear, we can do something about monetary policy,” Remolona said. “We kind of anticipate when they would appear.”

He noted that such second-round effects typically take two to three months to materialize, but could emerge sooner given the sharp rise in oil prices.

“This is kind of a new experience… the sense of uncertainty is bigger now than before,” he said.

A key trigger for policy action would be a shift in inflation expectations, which the BSP monitors closely as part of its inflation-targeting framework.

“When expectations remain anchored, that means we have credibility… and then that makes our job easier,” Remolona said. “But without that, then we have to be more aggressive.”

Nonetheless, the BSP chief said that inflation expectations two years ahead remain anchored, suggesting that price pressures are not yet becoming entrenched.