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BSP: Inflation unlikely to hit 7%

Rate seen peaking in October or November; prices stabilizing
By: - Reporter / @bendeveraINQ
/ 05:20 AM October 17, 2018

Inflation is seen peaking in October or November but will unlikely hit 7 percent, a member of the Bangko Sentral ng Pilipinas’ policymaking Monetary Board said Tuesday.

The Cabinet-level Development Budget Coordination Committee, meanwhile, raised its 2018 inflation forecast range to 4.8-5.2 percent from 4-4.5 percent during the previous DBCC meeting in July.

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For 2019, economic managers see headline inflation averaging between 3 percent and 4 percent, while they expect the rate of increase in prices of basic goods to return within the 2-4 percent target range starting 2020.

In September, inflation reached a new over nine-year high of 6.7 percent, bringing the nine-month average to 5 percent, above the government’s target.

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Monetary Board member Felipe M. Medalla said in a press conference that inflation could still go up next month, later clarifying to reporters that he meant October or November.

But Medalla said the year-on-year rate would not reach the 7-percent level, citing his personal computation.

As for the month-on-month price increases, Medalla said these would have peaked already this month and decline starting November.

“We expect the month-on-month to start normalizing already. But because of the year-on-year, which is an accumulation of 12 months, [inflation] may still go up,” Medalla said.

As far as monetary policy is concerned, Medalla said: “If there are signs that inflation is already abating as measured by the month-on-month, we may take a pause. But that is too early to tell at this point.”

The BSP already raised the key interest rate by 150 basis points so far this year, with back-to-back 50-bp hikes delivered in August and September.

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TAGS: 2018 inflation forecast, Bangko Sentral ng Pilipinas, Inflation
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