Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Friday inflation rate in October likely remained benign and steady at 2.3 percent, the mid-point of the bank’s forecast range, on slower increases in the prices of rice and fuel.
Diokno, in a message to reporters, cited the projection of the BSP’s Department of Economic Research showing inflation could settle within a range of 1.9 percent to 2.7 percent in October. The Philippine Statistics Authority will release the official inflation data in the first week of November.
“Higher electricity rates in Meralco-serviced areas, increases in LPG and kerosene prices and the impact of weather disturbances on selected food items contributed to upward price pressures for the month,” the department said.
These pressures could be partly offset by lower prices of gasoline, diesel and rice and downward adjustments in the water rates of Manila Water Co. Inc. and Maynilad Water Services Inc..
Diokno said the BSP would remain watchful of economic and financial developments “to ensure that its primary mandate of price stability conducive to balanced and sustainable economic growth is achieved.”
Inflation slightly eased to 2.3 percent in September from 2.4 percent in August because of lower food prices. This brought the nine-month average to 2.5 percent, within the 2020 target range of 2 percent to 4 percent.
Diokno said earlier that inflation in the third quarter settled at 2.5 percent. “We have ample policy room due to the benign inflation environment,” he said, adding that any tweak in the policy stance in the future would remain “data dependent.”
The manageable inflation environment was one of the reasons for the BSP’s reduction of the policy rate by a total of 175 basis points this year, bringing it to a record-low 2.25 percent.
The BSP also cut the reserve requirement ratios of banks by 200 basis points to 12 percent in previous Monetary Board meetings.Julito G. Rada
“These measures helped restore calm in the financial markets,” Diokno said.
He also said the reduction in policy rates and RRR aimed to encourage banks to address the financing needs of firms and individuals amid the health crisis and support the economy.