By Lee C. Chipongian
The Bangko Sentral ng Pilipinas (BSP) remains confident of its 2020 inflation outlook and expectation – which is 2.9 percent until 2021 – and assessed that there are no unexpected factors or shocks to overly worry about.
After November’s turnout of a 1.3 percent inflation, higher than October’s 0.8 percent but within the BSP’s forecast for the month of 0.9 percent to 1.7 percent, the BSP said inflation is still “consistent” with its assessment that it has bottomed out in October and is now “expected to gradually approach the midpoint of the target range in 2020 and 2021.”
The central bank reiterated on Thursday what they see as upside risks to the inflation outlook in 2020 which remains to be global oil price volatility and the African Swine Fever outbreak’s impact on local prices.
For 2021, the BSP said the risks are tilted to the downside. “The impact of global trade and policy uncertainty as well as geopolitical tensions continue to be the main downside risks to inflation.”
The Monetary Board will conclude its last monetary policy meeting for 2019 next week, December 12, and BSP Governor Benjamin E. Diokno has said that depending on the latest data – mainly the inflation in November – they will likely continue to keep the key overnight rate as is.
“The BSP will consider all the latest economic developments here and abroad in the Monetary Board’s policy meeting on December 12 to ensure that the monetary policy stance remains consistent with the BSP’s price stability objective while being supportive of economic growth,” the BSP said in a statement.
The BSP said inflation in November was driven by higher prices of electricity, LPG, gasoline, and selected food items. “These were tempered by the continued decline in rice prices along with the appreciation of the peso,” it added.
The BSP as of November 14 has a 2019 inflation forecast of 2.5 percent, and 2.9 percent for 2020 and 2021. During its seventh Monetary Board policy meeting for the year, the BSP decided to pause and kept the benchmark rate at four percent.
ING Bank senior economist Nicholas Mapa said the November inflation, which was higher than what the market expected of just 1.2 percent, may just allow the BSP “enough to prod (for a) pause at its next meeting.”