The chief economist of the Department of Finance said Friday that the Bangko Sentral ng Pilipinas (BSP) would likely keep interest rates steady until yearend amid expectations of stable prices of goods in the remaining months of 2014.
Finance Undersecretary Gil S. Beltran noted that alongside the slower inflation rate of 4.3 percent last October compared with the 4.4 percent in September, “the moving average over the past three months shows a more or less declining trend in inflation.”
Beltran said the slightly lower October inflation was a result mainly of lower prices of most food items that month. Food price inflation, in particular, went down to 7 percent last month from 7.4 percent in September.
But while food price inflation eased in October, Beltran said the prices of rice as well as bread and cereals had dealt with upward pressures amid dry weather. In the case of rice, its average price went up by almost 11 percent last month.
In an interview on the sidelines of the International Tax Forum also Friday, Beltran said that while the dry spell delayed the harvest season, farmers have started harvesting this month, which augurs well for food prices during the Christmas holiday season.
“The prices of goods during the Christmas season of this year are expected to be at the same levels as last year,” Beltran said.
As such, monetary authorities are seen keeping key policy rates steady for the rest of the year. “The lower inflation in October will enable BSP to maintain accommodative monetary policy that will boost the country’s capability to sustain economic growth during the last months of 2014.” The economy is projected to expand by at least 6.5 percent this year.
Beltran said that there were neither internal nor external factors that could push upward the prices of consumer goods toward the end of the year.
Last month, the policy-setting Monetary Board kept prevailing interest rates steady amid stabilizing consumer prices.
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