Inflation may have peaked in September – BSP
Bangko Sentral ng Pilipinas (BSP) officials reiterated yesterday that based on their estimates, inflation rate which climbed to a 6.2 percent average in the third quarter, may have already reached its peak for the year which was 6.7 percent for the month of September.
“We said in our assessment that we released in September that the peak inflation happens during the third quarter of the year and we (now) expect inflation to begin moderating,” said BSP Assistant Governor for monetary policy sub-sector, Francisco G. Dakila Jr., during the BSP quarterly inflation report briefing. The BSP will release its October inflation forecast range at the end of the month.
The BSP on September 27 raised its 2018 inflation forecast to 5.2 percent from an earlier estimate of 4.9 percent. Next year’s inflation outlook has now breached the two-four percent target, at 4.3 percent from a previous forecast of 3.7 percent while the 2020 forecast remains at 3.2 percent.
BSP Deputy Governor Maria Almasara Cyd Tuaño-Amador, the current officer-in-charge, said they will process new information in considering inflation outlook revisions ahead of the Monetary Board’s next policy meeting on November 15.
She said inflation expectations obtained in a survey in September was the basis for current estimates but these change on a monthly basis. “Given (that) there’s some dampening of pressures including dampening in exchange rate volatility and also some stabilization in oil price dynamics, we hope that inflation expectations are now better anchored and better cemented.” The BSP will again conduct a new survey next week for the October inflation outlook will form one of the basis for monetary policy action next month.
“The forecast changes from time to time because of new information and interpretation of economic (dynamics) … it’s a very important factor in monetary policy decision-making but it’s an evolving view. You get more information from today until the board meets in mid-November and we will continue to refine our forecasts,” said Tuaño-Amador.
She added that in considering all data points, there should be “no question that the BSP continues to be watchful to any threats to price stability objective and we will react accordingly.”
“The BSP believes that it has sent a firm signal of its commitment to combat inflation and safeguard price stability, the need to proactively manage risks of second round effects as well as to anchor and cement inflation expectations,” said Tuaño-Amador.