inflation projections. the chart on the left shows the bsp's forecasts on inflation over the coming months. the darkest part in the middle of the blue graph indicates that we expect average inflation to fall within our target range of 2 percent to 4 percent in 2024 and 2025. the balance of risks to this latest inflation outlook has shifted to the downside, and this is due largely to the implementation of rice tariff reduction. we still face some upside risks for inflation. these risks will come from higher domestic prices of food items other than rice from transport charges and from electricity rates. on the right side, we show the trend in inflation expectations based on our survey of external forecasters. the green line shows how inflation expectations for 2024 have evolved. the blue and red lines are expectations about future inflation rates in 2025 and 2026. the surveys show inflation expectations are well anchored, implying that we have to worry less about second - round effects of supply shocks. evolving inflation conditions show that the bsp can hold its policy settings steady for the time being. if price pressures continue to ease, it will be possible for the bsp to consider a less restrictive monetary policy stance. nonetheless, lingering supply concerns and geopolitical risks warrant continued and close monitoring of risks to the inflation outlook. the national government's policies and programs play an important part in helping ease inflation pressures. shown here are some of the short - term government initiatives to improve food supply that are expected to help. one is tariff modification and importation measures, a prominent example of which is eo 62. there is also the strong push to enhance productivity through the provision of high - quality seeds, farm and fishery gear and equipment, and other policies that address supply issues. banks remain healthy along with price stability, the bsp assigns high priority to financial stability. i am pleased to report that our banks are in good shape. their balance sheets are strong, their operations are profitable, and they are very liquid. the graph shows that our banks remain well - capitalized and highly liquid. the chart on the left, the brown bar, refers to international standards for capital adequacy. the dark purple bar refers to the banks'actual capital adequacy. as you can see, the actual capital that banks hold exceeds - very significantly - [ the ] international standards for capital. the chart on the right shows the liquidity coverage of our banks. 2 / 4 bis - central bankers'speeches the brown

provided with the necessary information for them to adequately assess fund performance. as we actively move towards a more digital society, i call on the fmap and its memberinstitutions to embark on and accelerate your own digital transformation journeys. digitalization can reduce distribution costs and make financial transactions faster and more convenient. financial institutions can also employ digital means to serve several clients simultaneously, thus expanding reach. the bsp has issued the sustainable finance framework, which advocates for the integration of sustainability or “ environmental, social, and governance, ” or esg, principles into the operations of supervised institutions. while the formal framework is specifically geared toward banks, we strongly encourage fund managers to consider environmental and social risks in your operations as well. esg investing is a principles - based strategy that can provide long - term favorable financial 2 / 3 bis central bankers'speeches returns. i invite the members of the fmap to adopt esg principles in your product offerings and investment strategies. some fund managers already offer esg funds, with three related uitfs currently available in the domestic market. these had an aggregate aum of 633. 8 million pesos as of september 2021. there are several more esg funds under development. given the strong value proposition of esg - related financial products, the bsp expects fund managers to be diligent in ensuring that your chosen investment outlets adhere to the esg investment standards. this entails sufficient evaluation of the issuers ’ sustainability - related commitments. moreover, funds that are marketed as esg products should have adequate disclosure on sustainability goals and impact. as responsible actors in the sustainable finance space, your promotion of investor protection is of the utmost importance. in closing, let me extend my well wishes to the new officers of the fmap. may you live up to the confidence placed in you by the membership. as the bsp continues to enhance the regulatory framework, i count on the fmap and its leadership to be effective partners in fostering increasing digitalization and sustainable finance. together, we can achieve more inclusive and sustainable financial markets! thank you and mabuhay tayong lahat! 3 / 3 bis central bankers'speeches