The Bangko Sentral ng Pilipinas said Monday inflation rate in September likely decelerated to as low as 0.6 percent from 1.7 percent in August because of lower rice prices and electricity rates.
An estimate by the BSP Department of Economic Research showed that the September 2019 inflation settled within the 0.6 percent to 1.4 percent range.
“The continued decline in rice prices and the downward adjustment in electricity rates could be offset by the recent uptick in fuel prices as well as higher prices of selected food items due to weather disturbances during the month,” it said.
“Moving forward, the BSP will remain watchful of economic and financial developments that could affect the inflation environment in line with its commitment to price stability conducive to long-term economic growth,” it said.
The Philippine Statistics Authority will release the official September inflation rate next week.
The continued deceleration in inflation prompted the Bangko Sentral to cut the benchmark interest rates last week by 25 basis points to 4 percent.
The interest rates on the overnight deposit and lending facilities were also cut to 3.5 percent and 4.5 percent, respectively.
The following day, the board also cut the reserve requirement ratios of banks from 16 percent to 15 percent in a bid to infuse more liquidity into the financial system.
ING Bank said the Bangko Sentral ng Pilipinas was expected to maintain the current policy stance until the end of the year.
ING Bank Manila senior economist Nicholas Mapa noted that with data pointing to inflation settling at 2.5 percent for the year, Diokno delivered in the second half a 100-bps reduction in bank reserves for the fourth quarter.
Mapa said the BSP “will likely pause until the end of the year after giving the economy a significant boost to aid the push for a 6-percent growth for the year as it unwinds the 2018 rate hike cycle.”