Consistent with our primary mandate, we have responded through policies appropriately aimed at sustaining price stability. We believe this is essential in ensuring sustained long-term economic growth. As I mentioned earlier, the BSP noted that the spikes in prices in early 2008 were supplyside in origin. These had mainly global roots and were expected to be largely transitory.
As is well accepted, such supply-side shocks are best addressed by non-monetary measures. Acknowledging that the impact of monetary policy under that scenario would be limited, the BSP followed a prudent approach by accommodating these first-round effects. In other words, BSP treated the resulting rise in prices as a shift in relative prices, and allowed it to go through.