The Bangko Sentral ng Pilipinas expects inflation in February to have slowed down within the range of 2.7 to 3.6 percent due to the decline in utility rates and the impact of the peso’s appreciation on overall consumer prices.
The inflation forecast for February was lower than last month’s 3.9 percent. The BSP said this would suggest that no significant price pressure could push average inflation beyond the 3 to 5 percent target set for this year and the next.
“Inflation is forecast to continue to be manageable, barring oil supply surprises due to any acceleration in the tensions in the Middle East,” BSP Governor Amando Tetangco Jr. told reporters on Tuesday.
The standoff between European countries and Iran raised concerns over the potential escalation of global oil prices. The European Union has decided not to import oil from Iran, one of the world’s major suppliers of oil, due to its alleged nuclear program.
Observers said the problem, if left unresolved, could disrupt supply and would lead to a hike in oil prices.
Dubai crude recently hit close to $120 per barrel. The BSP assumed that global oil price would average between $90 and $110 per barrel this year.
“We will continue to monitor global developments and their impact on our own domestic inflation dynamics to see if there is a need to make any adjustments to our policy settings,” Tetangco said.
In January, the BSP cut its key policy rates to boost the economy.
Tetangco said that the central bank is open to reviewing its monetary policy to ensure that efforts to push economic growth will not cause inflation to breach the cap.
The BSP’s key policy rates currently stand at 4.25 percent and 6.25 percent for overnight borrowing and lending.