By Lee C. Chipongian
The Bangko Sentral ng Pilipinas (BSP) forecasts April inflation could hit a low of 2.7 percent but may also reach a high of 3.5 percent due to upside pressures, according to the BSP Department of Economic Research (DER).
The BSP thinks inflation could still be in the three-percent level because of higher domestic oil prices and the “slight upward adjustment in electricity rates are seen to provide upside price pressures for the month.”
In March, inflation slipped to 3.3 percent from 3.8 percent in February and 4.4 percent in January, for an average rate of 3.8 percent at the end of the end of the first quarter. The 3.8 percent year-to-date average is lower than the previous quarter’s 5.9 percent. For April, the BSP included a below three-percent forecast to as low as 2.7 percent because these upside pressures “may be partly offset by the continued decline in rice prices and by the peso appreciation,” it said.
“The BSP will continue to closely monitor evolving price trends and will undertake necessary measures towards its commitment to price stability,” the DER stressed.
The central bank’s inflation forecast for 2019 and 2020 is three percent, the middle of the target inflation rate of two-four percent until 2021. These estimates will possibly change on May 9, the Monetary Board’s next policy rate review.
BSP Governor Benjamin E. Diokno on Monday said that in determining its next action – whether to cut interest rates first or reduce reserve requirement ratio — he will ensure that the BSP will “continue to adhere to its approach to monetary policy by being always data-driven, evidence-based, and attuned to the dynamic and evolving environment.”
“We also aim to implement various enhancements to the way we conduct our monetary operations to give further traction to the BSP’s prior efforts in shifting toward more market-based instruments,” he told a forum.