stay on the supply - side now, let me go back to price stability. what is clear is that inflation - if you just look at the headline numbers and core inflation - is really much, much higher than normal. by the way, if you look at the short history of the philippine inflation - targeting central bank, the longest number of consecutive months where we missed our [ inflation ] target 1 / 3 bis - central bankers'speeches on the high side is 15 months. so, what it really means is that supply shocks do not become self - perpetuating inflation. now, this [ current period ] is particularly a bad period because of a series of shocks. as shown by the green little bars at the bottom of the page, we were initially expecting to go back to 0. 3 percent per month inflation, but that was delayed by two months because of shortages of vegetables and, of course, the big news in the philippines - the shortage of onions. our policies are to prevent supply shocks from generating more inflation because [ we feared that ] inflationary expectations have gotten out of control. and, as you can see, this is one of the reasons why we are quite aggressive [ in tightening monetary policy ]. if you look at the chart on the right, we will see that private sector forecasts of inflation are much higher than our [ bsp's ] forecast. so, there is a risk that the supply shock can generate, what we all call, " second - order effects. " and that is the reason we have to be quite aggressive, and we are actually more aggressive than all our asian neighbors. inflation on a target - consistent future path by the way, we expect inflation to return to normal. last year's month - on - month [ figures ] are already quite consistent with it. but we need a series of month - on - month [ figures ] of 0. 3 percent [ for year - on - year inflation ] to be able to go back to the 2. 0 to 4. 0 percent inflation target by the late part of the third quarter or the early part of the fourth quarter [ of 2023 ] and for the rest of 2024. relief from foreign exchange pressures the biggest challenge, of course, was the pivot of the us [ federal reserve ] to tight money, [ which ] caused a large depreciation of the peso, just like many other currencies. and, actually, there are two stories : what you

see here is the summary for 2022, when the peso depreciated by 8. 0 percent. but, if you looked at the numbers from october, the depreciation was 13 percent. this [ depreciation ] was strengthening very high inflation, and the fall in the exchange rate is starting to disanchor inflationary expectations. the fruits of decisive monetary action [ faced with these developments, ] we had an increase in the policy rate of 350 basis points ( bps ). i do not own all the 350 bps ; 25 bps of that came from [ finance ] secretary [ benjamin ] diokno when he was still [ bsp ] governor. the remaining 325 bps were all mine. so, it [ policy rate ] is much higher than the neighbors. and, as you can see, what happens, later on, is that depreciation [ narrowed ]. as the us dollar began to weaken, and as expectations of the philippine central bank acting [ to stem weakness in the peso ] had its effect on the market, the peso actually began to appreciate. 2 / 3 bis - central bankers'speeches of course, the other thing we did was we sold quite a bit of dollars from our reserves. as you can see, our reserves declined by us $ 13. 7 billion. it [ the dollars sold ] is about 12. 6 percent of our reserves. the only country that has bigger, in relation to reserves [ sold as a percentage of their gross international reserves ], were india and thailand. so, the point is : we are very successful in bringing down inflation. we expect it [ inflation ] to go back [ to within target ]. it is already target - consistent at this point, but the year - on - year numbers will, of course, take time. [ the effects will ] most likely [ manifest ] by the end of the third quarter or the fourth quarter of this year. thank you very much. 3 / 3 bis - central bankers'speeches