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Friday, March 29, 2024

Inflation likely dipped to as low as 2% in March

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The Bangko Sentral ng Pilipinas said inflation in March likely slowed to as low as 2 percent from 2.6 percent in February, pulled down by lower oil prices amid the spread of the coronavirus disease 2019 worldwide.

The BSP Department of Economic Research said in a statement the March inflation would likely settle within a range of 2 percent to 2.8 percent.

“The sharp decline in the prices of petroleum products due to the significant fall in global crude oil prices contributed to the downward price pressures for the month,” it said.

“In addition, the prices of selected food products remained broadly stable in March due to adequate supply and favorable weather conditions along with the price freeze imposed on basic necessities by the Department of Trade and Industry and the Department of Agriculture,” it said.

Electricity rates in Meralco-serviced areas slightly increased during the month.

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The BSP assured it would continue to monitor economic and financial developments and was ready to implement appropriate policies in support of its primary mandate of price stability conducive to balanced and sustainable economic growth.

Inflation in the first two months averaged 2.8 percent, following the slowdown in consumer prices in February to 2.6 percent from 2.9 percent in January.

The benign inflation environment prompted the Bangko Sentral to cut the policy interest rates by 50 basis points to 3.25 percent on March 19. The move was also aimed at providing monetary stimulus to counter the impending economic slowdown amid the onslaught of the COVID-19.

The Monetary Board’s latest baseline forecasts indicated a lower path of inflation for 2020 and 2021, with inflation expectations remaining firmly anchored within the target range of 2 percent to 4 percent. 

Average inflation is seen to settle at 2.2 percent in 2020 and 2.4 percent in 2021.

Diokno said the latest forecasts were below the February monetary policy meeting projections of 3.0 percent for 2020 and 2.9 percent for 2021.

The BSP on March 24 also cut the reserve requirement ratios of universal and commercial banks by 200 basis points to 12 percent to boost domestic liquidity.

Diokno said the 200-bps cut in RRR would translate into P180 billion to P200 billion that could be freed up to the financial system

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