Albay Rep. Joey Sarte Salceda has called on the Marcos economic team to focus on “solving constraints in the real economy” and to “shield the poor from largely external factors of inflation.”
Salceda’s suggestion came amid calls for faster interest rate hikes by the Bangko Sentral ng Pilipinas (BSP) to address fears of spiraling inflation.
“The decision of the Central Bank on whether to increase rate should be predicated on just two things: whether the country’s inflation is caused by excess liquidity in the Philippine markets, and whether the rate hike relates to the causes of inflation in the Philippines,” Salceda said.
Salceda, chair of the influential House Committee on Ways and Means, said for the time being, “the answer is largely no, so we should not self-inflict a pain that is, in all likelihood, going to be futile for addressing price concerns.”
Salceda added that “year-on-year, the first quarter broad money only expanded by 7.7 percent, while GDP expanded by 8.3 percent. That means the real economy, for now at least, is still growing faster than our money printing. Money supply then, isn’t the problem with prices, as we can clearly see with the main factors: transport, fuel and energy, and food.”
“Between inflation with growth and inflation with slower growth due to an untimely or unnecessary rate hike, I would prefer inflation with growth,” Salceda said.
He called on the economic managers to instead “focus on the constraints in the real economy, and to shield the poor from the worst effects of inflation.”
“During my time as an investment banker, I sparred with some officials of the BSP on the central bank’s actions to support the peso during the years that immediately presaged the Asian Financial Crisis. Monetary policy action should relate directly to the cause of the economic incident being addressed. Otherwise, it will be costly and almost certainly futile.”
Salceda also said that he supports a Bayan Bangon Muli package that is more “inflation-busting” than focused on more spending.
“I am filing a version that is more focused on inflation-busting powers of the President and programs to remove supply constraints. That is the need of the time.”