BSP still watchful of price developments even as inflation slows

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MANILA – The Bangko Sentral ng Pilipinas (BPS) on Tuesday said domestic supply-side pressures are projected to decrease further in the coming months and allow inflation rates to stay within the government’s 2 to 4 percent target this 2019.

This after the rate of price increases further decelerated to 4.4 percent last January from month-ago’s 5.1 percent on account of slower inflation of food and transport indices.

BSP projected the January 2019 inflation to stay between 4.3-5.1 percent.

In a statement, the central bank said last month’s inflation rate “is in line with a target-consistent inflation path as inflation rate is projected to decelerate further in 2019 to 2020.”

“Domestic supply-side pressures are seen to further ease, while the impact of BSP monetary policy adjustments in 2018 is expected to continue to work their way through the economy,” it said.

In 2018, BSP’s policy-making Monetary Board raised the central bank’s key policy rates by a total of 175 basis points as inflation rise due to jump in the prices of food items like rice and vegetable because of supply constraints as well as hikes in global oil prices.

Inflation peaked at 6.7 percent in September to October last year but slowed to 6 percent in November with the help of both the monetary and non-monetary measures implemented by the government.

While supply side risks have eased, the BSP said “volatility in the global oil market will likely continue to influence the outlook for inflation.”

“Against this backdrop, the BSP continues to keep a close watch over price developments in the country and shall consider all relevant information at its next monetary policy meeting on 7 February 2019 to ensure that the monetary policy stance remains consistent with the BSP’s primary mandate of price stability,” it added. (PNA)

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