Neil Jerome Morales and Enrico Dela Cruz
Manila (Reuters) – Due to Shipping and food prices fell and the Philippines’ annual inflation rate fell in February for the first time in six months, but the central bank is unlikely to let the central bank tighten monetary policy further.
The statistics agency said the consumer price index (CPI) slowed to 8.6% in February after accelerating non-stop since August, but core inflation rose from 7.4% in January. % rose to 7.8%, indicating price pressures remain.
Annual inflation rate remains above Bangko Sentral ng Pilipinas (BSP) comfort level of 2% to 4%, central bank March 23 meeting A rate hike looks almost certain.
“The BSP remains prepared to adjust its monetary policy settings if necessary to prevent runaway inflation expectations and maintain the inflation target within the policy horizon,” it said in a statement.
But with headline inflation lower than expected and month-on-month inflation at zero, ING economist Nicholas Mapa tweeted that the BSP may opt for a 25bps rate hike instead hike400 bps increase.
Economists had forecast inflation accelerating to 8.8% in February, compared with the central bank’s forecast for February of 8.5% to 9.3%.
Since last year, the BSP has raised interest rates eight times, totaling 400 basis points, bringing the overnight reverse repurchase facility rate to 6.0%, which is the highest since 2007.
Even at this level, Philippine interest rates are still “reasonable” in the face of surging prices, Finance Minister Benjamin Diokno as central bank vice-president The currency board said at a media briefing.
Diokno added that despite high inflation, the economy remains solid and the monetary authority expects to return to the target range by the fourth quarter of this year.