The Bangko Sentral ng Pilipinas (BSP) sees the stronger peso and lower electricity rates to counter the impact of higher prices of oil products and water rates of October 2010 inflation, which is projected between 2.6-3.5 percent.
BSP Governor Amando Tetangco Jr., in a text message to reporters Wednesday, said “inflation is likely to remain low.”
Rate of price increases last Sept. dropped to 3.5 percent from the previous month’s four percent bringing the average in the first nine months this year to 4.2 percent.
The government’s inflation target for this year is a range between 3.5-5.5 percent.
BSP forecast average inflation this year to stay at the mid-point or even lower than the median of the target.
“Based on this forecast, average inflation during the policy horizon is expected to be well-behaved, barring surprises, particularly in terms of global adjustments,” Tetangco said.
Monetary officials said risks to inflation remains as international oil prices remains on the uptrend.
However, path of the global recovery is in question due to the uncertainties in major economies amid the resiliency and growth momentum in emerging economies like the Philippines.
“We will continue to monitor both domestic and international developments to ensure that our monetary policy stance remains appropriate and responsive,” Tetangco added. (PNA)