PH inflation outlook remains manageable
MONETARY authorities will be watchful of the US Federal Reserve’s plan to hike rates before yearend as well as the Duterte administration’s proposed tax policy reform program, even as the domestic inflation outlook remains manageable.
“The Fed chair’s statement is more or less as expected, well-balanced and nuanced,” Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said in a text message to reporters, referring to US Federal Reserve Chair Janet Yellen’s recent pronouncements.
In a speech at the Fed’s annual monetary policy conference in Jackson Hole Saturday morning Manila time, Yellen said: “I believe the case for an increase in the federal funds rate has strengthened in recent months.”
Tetangco said “the BSP will not necessarily have to move in sync with the Fed should they hike either in September or December as the Fed chair’s comments indicate that they are getting closer to their next move.”
“Our current inflation outlook continues to be manageable,” Tetangco pointed out.
Tetangco nonetheless said the BSP was “mindful that there could be some near-term financial market volatility as markets react to the Fed statement and rebalance dollar holdings.”
Also, the BSP “will continue to monitor developments, including changes in tax levies and weather-related disturbances, that could impact on domestic price and demand dynamics, and make adjustments to our monetary policy stance as appropriate,” Tetangco added.
At its Aug. 12 meeting, the Monetary Board, the BSP’s highest policymaking body, kept rates steady as prices of basic goods and services were expected to remain stable for the rest of the year.
In a separate text message, Tetangco said the BSP expected inflation in August to settle within the 1.6-2.4 percent range.
“Upward price pressures may come from higher domestic oil and rice prices. However, these could be partly offset by the decline in the power rates in Meralco-serviced areas and lower prices of selected vegetable items,” Tetangco said.
Headline inflation in July logged at 1.9 percent, bringing the seven-month average to 1.4 percent, below the 2-4 percent target.
