By Joann Santiago
The Bangko Sentral ng Pilipinas (BSP) expects drop in oil prices that might o result in slower inflation rate this month, but cautions that hike in utility rates and fare increases might push inflation higher.
BSP Governor Amando Tetangco Jr., in a text message to reporters Friday, projects inflation to stay within 2.1 to three percent in the fourth month this year.
“The April inflation rate could be lower than that registered last month (March) if the impact of lower prices of international oil and domestic fuel products and the peso appreciation was not offset by higher utility charges and transport far increases,” he said.
Inflation last March slowed down to 2.6 percent from the previous month’s 2.7 percent while rate of price increases in April 2011, stood at 4.8 percent.
Tetangco maintains that monetary officials continue to see “within target” average inflation this year.
BSP forecasts inflation to average at 3.1 percent this year and slightly increase to 3.3 percent in 2012. Next year’s forecast was revised downward from 3.4 percent previously.
The central bank chief cited that although he sees inflation to stay within target up to next year, “we are mindful of upside risks to inflation coming particularly from volatility in oil and other commodity prices, and the possible second round effects from such supply shocks.”
“That said, we are ready to make adjustments to our policy stance as appropriate to keep inflation expectations anchored to our target range,” he said.
Central bank’s policy-making Monetary Board (MB) maintained the BSP’s policy rates during its meeting this month after cutting it with a total of 50 basis points in the first two policy meetings this year.
To date, BSP’s overnight borrowing rate is at record-low of four percent and the overnight lending rate is at six percent.