BSP wary as inflation steadies

BSP wary as inflation steadies

by UA&P News Desk on April 6, 2011 - 3:52 pm

from, by Antonio Siegfrid O. Alegado and Daniel Anne Nepomuceno-Rodriguez, BusinessWorld

MANILA, Philippines- Annual inflation steadied at 4.3% last month but the result — below analysts’ estimates and near the low end of the central bank’s forecast — was not seen as a guarantee that monetary authorities would hold off from further tightening.

While “price movements continue to be well-behaved,” Bangko Sentral ng Pilipinas (BSP) governor Amando M. Tetangco, Jr. told reporters, “We will continue to monitor developments, particularly for any signs of second-round effects and shifts in inflation expectations, to ensure that our policy settings remain appropriate.”

The central bank last week hiked key interest rates by 25 basis points, its first adjustment since July 2009, amid inflation worries brought about by rising oil prices. Succeeding reviews will be held on May 5, June 6, and July 28.

“The steady March inflation rate shows the normalizing prices of key food and non-food commodities,” central bank Deputy Governor Diwa C. Guinigundo said in an e-mail to BusinessWorld.

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Peter Lee U, economist at the University of Asia and the Pacific, expects a result below 4.5%, with further tightening hinged on the rise in consumer prices topping 5%.

Mr. Diokno said the March data should give the BSP reason to “pause and reflect” amid signs of a slowdown in economic growth that could be aggravated by tighter policy.

“The economy appears to be slowing, by how much, we don’t know yet. We will know when the first quarter numbers are released,” he said […]

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