BSP sees continued easing of price increases

Consumer prices around the country are expected to rise at an even more moderate pace in the coming months as policy interventions undertaken by various government agencies work their way through the economy, the Bangko Sentral ng Pilipinas said on Tuesday.

This came after the Philippine Statistics Authority announced the inflation in February fell to 3.8 percent, lower than the 4.4 percent in January — and the third consecutive month of decline — boosting sentiment that the central bank under newly appointed Governor Benjamin Diokno would cut interest rates soon.

In its statement, the BSP said the latest inflation outturn was consistent with the BSP’s expectation of the continued easing of price pressures.

“Inflation will likely settle within the target range in 2019 and 2020 as previous monetary and nonmonetary policy actions work their way through the economy,” the central bank said. “The recent enactment of the Rice Tariffication Act will further temper rice prices in the near term and help raise long-run productivity in the agricultural sector.”

Diokno had said his priorities as the country’s new monetary and banking regulator would be to promote economic growth in addition to the BSP’s primary role of fighting inflation.

“BSP’s role is to ensure steady, strong growth,” he told a television interview, indicating that interest rates — raised sharply last year to fight nine-year high inflation — may soon be adjusted down to give the economy a boost. “In order to achieve this, the monetary policy has to be in sync with fiscal policy.”

For its part, the central bank statement said it would continue “to keep a close watch” over price developments  in the country, and “consider  all  relevant  information” at its next monetary policy meeting on March 21, 2019, “to ensure that the monetary policy stance remains  consistent with the BSP’s primary mandate of safeguarding price stability.”