MANILA - The Bangko Sentral ng Pilipinas said on Wednesday that the inflation environment remains manageable and that the uptrend is transitory.
BSP Governor Benjamin Diokno also said monetary policy will continue to remain supportive of economic activity to ensure sustained recovery.
In remarks ahead of the central bank's policy meeting on Thursday, Diokno said the central bank is also on guard against "second-round effects" that could push inflation higher.
"The BSP remains ready to respond to second-round effects such as increased calls for wage and transport fare hikes and elevated inflation expectations," Diokno said.
"Thus far, demand-side pressures remain muted."
Inflation accelerated to 4.7 percent in February, its highest in more than two years, driven by higher pork and meat prices.
A Reuters poll of 13 economists predicted the BSP will keep the rate on its overnight reverse repurchase facility at a record low of 2 percent for a third straight meeting, despite the uptick in inflation.
While the BSP has room to "preserve" monetary policy support for the economy, Diokno warned that a resurgence of COVID-19 infections could further dampen domestic demand and overall business and consumer confidence.
The government has reimposed stricter rules on movements in Metro Manila and nearby provinces as daily spikes in COVID-19 cases hit the highest since the pandemic began, threatening hopes for an economic rebound after last year's record contraction.
- With reports from Reuters