The BSP is maintaining a hawkish interest rate posture even as inflation decelerated to 4.1 percent for November – which is better than expected and only a touch outside the 2 to 4 percent target inflation range. Our unemployment rate is at an 18-year low, matching the lows of the Arroyo era when the economy was solidly managed. In other economies, the unemployment rate usually rises when monetary authorities tighten through interest rate increases. The exuberance indicated by a lower inflation rate and an even lower unemployment rate may be short-lived. This should be a cautionary tale for hawkish central bankers fixated exclusively on the inflation rate.

Source: Philippine Star December 09, 2023 03:53 UTC