MANILA – Philippine monetary authorities are monitoring the diplomatic row in the Middle East for possible oil price shocks, which could affect local prices, the incoming head of the central bank said Friday.
Bangko Sentral ng Pilipinas Deputy Governor Nestor Espenilla said local authorities would “stand back and reevaluate the situation” and formulate a “holistic response.”
“It may well be that this is a blip and this will dissipate and obviously, that wouldn’t warrant a policy response,” said Espenilla, who will succeed Governor Amando Tetangco on July 3.
“It may have longer term implications on oil prices, inflation… At this stage, it is quite premature to react to that situation,” he told ANC’s The Boss.
Saudi Arabia, Egypt and the United Arab Emirates cut diplomatic ties with Qatar on Monday, roiling oil markets.
Oil prices fell for a third day on Tuesday, hit by concerns that the diplomatic row would undermine an OPEC-led push to tighten the market.
Consumer prices in the Philippines rose 3.1 percent in May, slower than analysts’ predictions and giving scope for the BSP to maintain borrowing rates when during its next meeting on June 22.
“The data point is very positive. It gives us convenient policy space,” Espenilla said.
Espenilla said the inflation path was “well inside” the central bank’s outlook and the uptick at the start of the year was expected.
Asked if the Monetary Board would maintain policy rates on June 22, Espenilla said, “We always are reviewing the situation.”
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