The Bangko Sentral ng Pilipinas (BSP) said that although the scope for keeping policy rates has narrowed due to continued climb of the inflation rate, there is still no need to hike rates.
This as the government reported the rise in the inflation rate to 4.3 percent last February from month-ago’s 3.5 percent on account of faster inflation rate in food and oil commodities.
BSP Governor Amando Tetangco Jr., in a text message to reporters Friday, said the jump in the rate of price increases “supports our view that the scope for keeping rates steady has narrowed.”
He explained that monetary officials will include this new information to their forecast runs “to see how much it moves the inflation path.”
He also said this development would be considered whether this “would lead to average inflation forecasts that would risk breaching the target for the policy horizon.”
“It is important to remember that the BSP looks at expected price movements over a longer policy horizon, and not simply on contemporaneous inflation,” he added.
To date, central bank’s overnight borrowing rate is at record-low of four percent while the overnight lending rate is at six percent, both of which were steady after being slashed with a total of 200 basis points from December 2008 to July 2009 to address possible impact from the recent global financial crisis.