Inflation to stay manageable this year, says BSP

The Bangko Sentral ng Pilipinas has expressed confidence that the rate of increase in consumer prices will remain manageable this year despite falling interest rates.

While low interest rates tend to encourage people to borrow more from banks and spur spending for goods and services, this will not necessarily cause inflation to accelerate, the BSP explained.

As long as growth in demand is matched with a commensurate rise in supply, the BSP said, then inflation should remain within the target ceiling.

The central bank’s inflation cap for this year falls within a range of 3 to 5 percent.

BSP Governor Amando Tetangco Jr. said in a briefing Tuesday that latest estimates indicated average inflation would fall below 4 percent this year.

“We have room [to cut interest rates further] in case there’s a need for it,” Tetangco said.

BSP Governor Diwa Guinigundo said cuts in interest rates do not always lead to higher inflation.

The BSP projects that annual inflation for January may range from 3.6 to 4.5 percent.

The official figure will be released next week.