Our focus is obtaining comprehensive information and making decisions based on inflation forecasts over a given policy horizon. Further, the BSP follows the standard approach of not reacting to supply shock episodes as these tend to be transitory or short-lived in nature, but monitor conditions for signs of second-round effects.
This was the case early this year when data indicate the inflation environment was driven by supply-side factors and our forecast continued to show inflation upticks as transitory and moderating within the target in 2019. Thus, adjustment in policy rate was not yet warranted. Starting in Q2 2018, however, we note that forecasts have shifted higher over the policy horizon.