DOF Calls for More Aggressive Fight Against Inflation

According to the Department of Finance (DOF) Secretary Benjamin E. Diokno, the Executive Department, specifically the local government units (LGUs) should be more “aggressive” to combat inflation.

“The monetary authorities have done their part; the Executive department, including LGUs, have to do more, be more aggressive and focused. In the fight against inflation, monetary policy is not the only game in town,”  said Secretary Diokno.

This statement by Secretary Diokno comes after the VSP increased its benchmark policy rate by 50 basis points (bps) to an almost 16-year high of 6%. The BSP likewise signaled increased rate hikes to tame inflation.

Last month, inflation reached a 14-year high of 8.7%, with food prices continuing to soar with supply issues. This induced the BSP to upwardly revise their average inflation predictions for 2023 from 4.5% to 6.1% and for 2024 from 2.8% to 3.1%.

“If the Executive department succeeds in controlling the sources of inflation on the supply side more effectively, there will be less reason for monetary authorities to raise policy rates,”  said Secretary Diokno, adding that non-monetary and direct steps should be implemented to bring down food prices and tackle supply issues.

It was likewise mentioned that the BSP had increased rates by over 400 bps since January 2022. To compare, India raised rates to 250 bps, Indonesia by 225 bps, and Malaysia and Thailand by 100 bps.

Secretary Diokno then mentions that the government is set to create a technical working group (TWG) to evaluate key food commodities’ demand and supply conditions.

Source: Business World