The Bangko Sentral ng Pilipinas said Friday inflation in November likely picked up slightly from 0.8 percent a month ago on higher fuel and food items.
The BSP Department of Economic Research said in a statement the November inflation would settle within the 0.9-percent to 1.7-percent range.
“The increase in electricity rates as well as higher prices of gasoline, LPG [liquefied petroleum gas], and selected food items are seen as the primary sources of upward price pressures for the month,” it said.
“Meanwhile, inflation could be tempered by lower domestic rice prices and the appreciation of the peso,” it said.
Inflation in October dipped to a 42-month low of 0.8 percent from 0.9 percent a month ago, tempered mainly by base effects and slower increases in the prices of food and oil.
The October print was also significantly slower compared to the peak of 6.7 percent in the same month last year. Tye figure brought the average in the first 10 months to 2.6 percent, way below the midpoint of the target range of 2 percent to 4 percent this year.
The benign inflation environment prompted the policy-making Monetary Board of the BSP on Sept. 26 to cut the policy interest rates by 25 basis points to 4 percent. The interest rates on the overnight deposit and lending facilities were likewise cut to 3.5 percent and 4.5 percent, respectively.
The board the following day reduced the reserve requirement of banks from 16 percent to 15 percent in a bid to infuse more liquidity into the financial system. Analysts estimate that around P90 billion worth of additional liquidity is unleashed to the financial system for every 1 percent cut in RRR.
On Oct. 24, 2019, the Monetary Board cut again the reserve requirement ratios of universal, commercial and thrift banks by 100 basis points or one percentage points effective the first week of December.
The board complemented the move with a reduction in RRR for non-bank financial institutions with quasi-banking functions. The reduction will be effective on the first day of the first reserve week of December 2019. Overall, the BSP cut by 400 basis points or 4 percent the RRR this year.
The RRR for universal and commercial banks now stood at 14 percent from 15 percent, and 4 percent from 5 percent for thrift banks.
Then on Nov. 14, 2019, the board kept its benchmark policy rates amid the easing inflation rate and expected acceleration of economic growth in the second half.
The Monetary Board decided to maintain the interest rate on the BSP’s overnight reverse repurchase facility at 4 percent. Accordingly, the interest rates on the overnight deposit and lending facilities were held unchanged at 3.5 percent and 4.5 percent, respectively.
BSP Governor Benjamin Diokno told reporters on the sidelines of an event in Pasay City Monday that the possibility for monetary authorities to do one final cut in policy interest rates this year remained.