Bangko Sentral to keep policy rates steady

There is no strong reason for monetary authorities to change policy rates soon given the weakening inflation, according to Governor Amando M. Tetangco Jr. of the Bangko Sentral ng Pilipinas.

Tetangco said in an interview Tuesday that such prevailing environment should prompt banks to give out more loans, which would help support domestic growth.

The BSP chief said the 4.3-percent inflation in August was within the central bank’s forecast range of 3.9 percent to 4.8 percent.

[The BSP uses inflation figures based on 2000 prices unlike the National Statistics Office, which rebased its inflation number to 2006 prices since June this year. Tetangco explained that since the central bank makes projections based on a two-year horizon, it cannot make the switch as readily.]

“With year-to-date average of 4.3 percent, we are poised to meet the full-year inflation target of 3 to 5 percent,” Tetangco said. “The August turnout supports our assessment of a manageable inflation environment over the policy horizon.”

“That confirms our assessment that the inflationary pressures have moderated and that inflation is now going to be within the target range of the BSP,” Tetangco added.

He said such direction of inflation numbers meant that there has been some slowdown in economic growth.