MANILA - The Bangko Sentral ng Pilipinas has raised its inflation outlook for the year to 4 percent from an earlier 3.2 percent, and said inflation was likely to remain elevated "in the coming months."
The BSP kept interest rates steady in its first policy meeting for 2021 even as inflation quickened for four straight months hitting a 2-year high in January.
"The Monetary Board noted that inflation is likely to remain elevated in the coming months, reflecting the impact of supply constraints on domestic prices of key food commodities such as meat and vegetables as well as the recent uptick in international oil prices," said BSP Governor Benjamin Diokno.
Diokno said the government must act on these supply-side issues, specifically the impact of the African Swine Fever on pork supplies.
BSP Deputy Governor Francisco Dakila said the inflation uptick "is of a transitory nature."
"Inflation is expected to go back to within the target range toward the later part of the year," Dakila said.
The BSP also raised its projections for oil prices this year.
He said that in December, they projected that Dubai crude would average $47.57 per barrel in 2021.
"With current developments, we have revised the assessment for Dubai Crude up to $54.65 per barrel," Dakila said.
The BSP also said Dubai crude would average $51.98 next yer, up from an earlier forecast of $47.44 per barrel.
Earlier in the year, the BSP said that the uptick in prices was transitory and that inflation was the "least of its worries."