BSP anticipates lower inflation in April
Published Apr 9, 2020 12:00 am
By Lee C. Chipongian
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno expects inflation to be lower in April after the government reported a 2.5 percent inflation in March.
MB file photo.
Inflation rate slowed in March versus February’s 2.6 percent.
Diokno on Tuesday said the inflation in April “is likely to be even lower.” He said inflation will decrease further because of the “collapse of world oil prices, the price freeze on basic necessities (and the) zero or near zero increase in utilities.”
The BSP said the global crude oil prices are consistent with latest futures market data and the latest assessment by international energy agencies on the outlook for the global oil market. The sharp drop in oil prices is due to expectations of lower world demand and the consequences of the fallout between Saudi Arabia and Russia.
As for the impact of the enhanced community quarantine on inflation, the BSP said the COVID-19 outbreak will have a negative impact on global manufacturing and trade, and quarantine measures to contain will dampen domestic demand, thus contributing to reduced inflation pressures in the coming months.
The BSP had forecasted a two percent to 2.8 percent range for the March inflation. The last time the rate was at 2.5 percent was in December 2019. It went up to 2.9 percent in January this year before it slipped to 2.6 percent in February.
In a separate statement, the BSP said the latest inflation result remains consistent with their as-sessment. “Inflation is expected to be benign over the policy horizon due to the potential adverse impact of COVID-19 on the domestic and global economic environment,” said the BSP .
The central bank reiterated that the balance of risks to the inflation outlook is still leaning toward the downside for both 2020 and 2021.
“The uncertainty over the strength and duration of the pandemic poses significant downside risks to aggregate demand,” said the BSP.
In its last Monetary Board policy meeting which was March 19, in the middle of the COVID-19 lockdown, the Monetary Board noted that while the enforcement of quarantine measures could help in slowing the spread of the virus, the resulting disruptions to industries and private spending are likely to reduce economic growth in the near term.
The BSP cut rates by 50 basis points (bps) that day, bringing to 75 bps the total reduction this year. The first 25 bps rate cut was last February 6.
“COVID-19 has dampened prospects for the global economy, which could negatively impact tourism, trade, Overseas Filipino remittances, and foreign investments,” said the BSP, explaining why the Monetary Board opted to slash rate by another 50 bps last month.
MB file photo.
Inflation rate slowed in March versus February’s 2.6 percent.
Diokno on Tuesday said the inflation in April “is likely to be even lower.” He said inflation will decrease further because of the “collapse of world oil prices, the price freeze on basic necessities (and the) zero or near zero increase in utilities.”
The BSP said the global crude oil prices are consistent with latest futures market data and the latest assessment by international energy agencies on the outlook for the global oil market. The sharp drop in oil prices is due to expectations of lower world demand and the consequences of the fallout between Saudi Arabia and Russia.
As for the impact of the enhanced community quarantine on inflation, the BSP said the COVID-19 outbreak will have a negative impact on global manufacturing and trade, and quarantine measures to contain will dampen domestic demand, thus contributing to reduced inflation pressures in the coming months.
The BSP had forecasted a two percent to 2.8 percent range for the March inflation. The last time the rate was at 2.5 percent was in December 2019. It went up to 2.9 percent in January this year before it slipped to 2.6 percent in February.
In a separate statement, the BSP said the latest inflation result remains consistent with their as-sessment. “Inflation is expected to be benign over the policy horizon due to the potential adverse impact of COVID-19 on the domestic and global economic environment,” said the BSP .
The central bank reiterated that the balance of risks to the inflation outlook is still leaning toward the downside for both 2020 and 2021.
“The uncertainty over the strength and duration of the pandemic poses significant downside risks to aggregate demand,” said the BSP.
In its last Monetary Board policy meeting which was March 19, in the middle of the COVID-19 lockdown, the Monetary Board noted that while the enforcement of quarantine measures could help in slowing the spread of the virus, the resulting disruptions to industries and private spending are likely to reduce economic growth in the near term.
The BSP cut rates by 50 basis points (bps) that day, bringing to 75 bps the total reduction this year. The first 25 bps rate cut was last February 6.
“COVID-19 has dampened prospects for the global economy, which could negatively impact tourism, trade, Overseas Filipino remittances, and foreign investments,” said the BSP, explaining why the Monetary Board opted to slash rate by another 50 bps last month.