MANILA - The Bangko Sentral ng Pilipinas on Monday said inflation will moderate to below its forecast in the next two years.
“Over the next two to three years we see inflation settling at between three and four percent. We don’t expect a pickup in the inflation rate and that’s why we are also projecting a low-interest rate environment,” BSP Governor Amando M. Tetangco Jr. told senators during a budget hearing.
The BSP had forecast inflation to range between 3 and 5 percent over the next two years.
Tetangco's announcement signals loose monetary policy in the next two years, during which time last month's 25 basis points cut in the BSP's policy rates are seen to work its way through the economy.
The BSP on July 26 said it cut its policy rates to head off the effects of the euro zone debt crisis and the weak recovery in the US, which is the Philippines' biggest trading partner.
The rate cut also took into consideration benign inflation, with the first-half figure at the low-end of the BSP's target range of 3 to 5 percent.
Early in the day, DBS said inflation last month likely settled at 3.1 percent. The National Statistics Office is scheduled to announce the July inflation numbers tomorrow.
The Singaporean bank said the BSP has room for another 25 basis points cut in its policy rates later this year.
Last month's rate cut brought the BSP's overnight borrowing and lending rates to record lows of 3.75 percent and 5.75 percent, respectively.
source: interaksyon.com
