vulnerabilities and facilitated credit offtake later in 2022 - 23. the benign liquidity conditions also enabled the banks to mobilise additional capital and strengthen their balance sheets to withstand future stress, if any. inflation challenges 6. at the height of the pandemic during 2020 and 2021, the mpc prioritised growth over inflation, given the frail economic conditions and notwithstanding intermittent inflationary pressures from supply shocks. for instance, supply - side pressures had nudged inflation above the upper tolerance band of 6 per cent in october 2020 and there were market concerns over the continuation of the accommodative monetary policy stance. under these circumstances, we provided both state - and time - based forward guidance on continuing “ with the accommodative stance of monetary policy as long as necessary – at least during the current financial year and into the next year... ” as output remained well below its pre - pandemic level. in the second half of 2020 - 21, inflation eased in line with our assessment as supply side pressures abated. the time - based element of the guidance helped to anchor market expectations and moderate undue expectations building up at that time of a possible reversal of the monetary policy stance. 7. in early 2022, inflation was expected to moderate significantly with a projected average rate of 4. 5 per cent for 2022 - 23, based on an anticipated normalisation of supply chains, the gradual ebbing of covid - 19 infections and a normal monsoon. such expectations, however, were belied by the outbreak of hostilities in ukraine since endfebruary 2022. initially, the shocks came from food and fuel prices, which were mainly global in origin, but local factors from adverse weather events also played an important role in increasing food inflation. the shocks to inflation got increasingly generalised over the ensuing months. moreover, strengthening domestic recovery and rising demand enabled pass - through of pent - up input costs to retail goods and services. this imparted stickiness to underlying core inflation and kept headline inflation at elevated levels. 8. under these circumstances, the mpc quickly changed gears by prioritising inflation over growth and also changed its stance from being accommodative to withdrawal of accommodation. the mpc acted proactively by holding an off - cycle meeting in may 2022 and raised the policy rate by 40 basis points. this was followed by rate hikes, albeit of varying sizes, in each of the five subsequent meetings till

can expect better prospects for the growth of the philippine capital market. undoubtedly, the continuing support of all financial industry players will ensure for us greater success in this endeavor. as a final note, i call on you to assist us in fostering an environment conducive to a vibrant domestic capital market. you are, undoubtedly, one of the major players in the capital market today. we will be relying on your experience in helping provide order and depth in the market. although the road ahead is considerably tough, i am confident that ab capital - armed with vision, a strong resolve and with sound leadership at the helm - will be more than prepared to meet the challenge. let us all do our share in responding to the call for building a deep, dynamic and liquid capital market a precondition for achieving sustainable economic growth. once again, happy anniversary and i wish you all more success in the years to come! comparatively lower than the 12. 7 percent npl ratio and 11. 4 percent npa ratio as of end - december 2004.