BSP sees 2.2% inflation for September

Published October 1, 2020, 6:00 AM

by Lee C. Chipongian

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said inflation in September could be lower at 2.2 percent, lower than August’s actual 2.4 percent rate.

According to Diokno, the BSP’s Department of Economic Research (DER) has projected range of a low of 1.8 percent for September inflation to a high of 2.6 percent. Since December 2019, the inflation rate has stayed at the two percent level.

Quoting DER, Diokno said the “lower rice and oil prices as well as Meralco power rates, along with the continued appreciation of the peso are expected to be the primary sources of downward price pressures for the month (and) these could be partly offset by the slightly higher price of LPG.”

“The BSP remains watchful of economic and financial developments, and stands ready to take necessary policy actions to ensure the delivery of its primary mandate of price stability conducive to a balanced and sustainable economic growth,” he said.

The BSP is expected to continue to adopt a “no change” policy stance when it meets this week, Thursday, for its sixth of eight monetary policy meeting.

The Monetary Board, to stimulate the recovering economy, has so far reduced the policy rate by a cumulative 175 basis points this year, bringing the interest rates down to 2.25 percent, the lowest in BSP policy rate history.

During its last Monetary Board policy meeting in August, the BSP revised higher its inflation forecast for this year to 2.6 percent from 2.3 percent and also increased the 2021 and 2022 forecasts to three percent from 2.6 percent, and 3.1 percent from three percent.

The benign inflation environment has enabled the BSP to keep interest rates low which is already in negative rate in real terms.