Indeed, in previous adjustments, the money illusion has allowed a great, silent redistribution of wealth: the holders of monetary assets and those with fixed incomes lost purchasing power, but as nominal income rose, they did not notice right away – and far less anticipated – the loss in real terms.
The timing and conditions of the BSP’s exit strategy will continue to be guided by the inflation and growth outlook over the medium term, the state of public health, and domestic and global risks to the economy. Economies with strong fundamentals tend to handle crises better.