The Financial Stability Coordination Council (FSCC) is closely monitoring the price and supply of energy-related products for their potential impact on the domestic economy.
The Bangko Sentral ng Pilipinas-led FSCC, in its 39th executive committee meeting, recognized that global indicators of market volatility “remained low.” However, it underscored the volatility in global oil prices.
“US inflation has come down but remains stubbornly high by the Fed’s own characterization. This suggests a high-for-long policy rate environment, which will likely affect the global economy,” the council said.
“In addition, geo-political risks have been protracted and, in recent cases, escalated,” it said.
The FSCC said economic growth in the Philippines remains strong, and among the highest in the world. Latest data suggest that the full-year inflation is unlikely to breach the upper end of the band. These are reassuring indicators that allow the Philippines greater control over its macro-financial path forward, it said.
April’s inflation brought the year-on-year national average inflation in the first four months to 3.4 percent, within the government’s target range of 2 percent to 4 percent.
“We find comfort in the broad indications of stability and their effects on the economy. These are issues that the FSCC will continue to monitor,” said FSCC chairman and Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr.
The government is targeting a 6 percent to 7 percent economic growth this year. The Philippine economy grew 5.7 percent in the first quarter of 2023, lower than 6.4 percent in the same period last year.
Remolona said “the volatility in the price and supply of energy-related products can affect economic activity, while a high-for-long global interest rate situation will weigh on debt servicing in general. These are issues that the FSCC will closely monitor and may address in due course, if warranted.”
The FSCC is an inter-agency Council composed of the BSP, the Department of Finance, the Insurance Commission, the Philippine Deposit Insurance Corp. and the Securities and Exchange Commission as member institutions. It started as a voluntary body right after the global financial crisis and has since been institutionalized under Executive Order No. 144.
