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Philippines: BSP to further cut 2019 inflation forecast
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is set to further lower its inflation forecast for this year despite the recent attack on the oil production facilities in Saudi Arabia.
BSP Governor Benjamin Diokno said on the sidelines of the Finovation 2019 organized by leading online financial marketplace eCompareMo.com, the central bank would likely announce a lower 2019 inflation forecast during its rate-setting meeting today.
“(It is) lower,” Diokno told reporters.
Based on its last assessment released last Aug. 8, the BSP lowered its inflation forecasts to 2.6 percent for 2019 and to 2.9 percent for 2020.
However, inflation eased further to a 35-month low of 1.7 percent in August from 2.4 percent in July. It averaged three percent in the first eight months, well within the BSP’s two to four percent target.
Diokno said the lower inflation forecast for 2019 would already factor in the impact of higher oil prices arising from the attacks in Saudi Arabia on the consumer price index.
The BSP chief said there are no changes on the government’s oil price and foreign exchange assumptions.
Diokno earlier said the country’s inflation would settle within the central bank’s two to four percent target as long as the price of oil would not breach the $85 per barrel level.
Oil prices soared by about 20 percent to over $69 per barrel as the Sept. 14 attacks knocked out almost half of Saudi Arabia’s oil capacity, but dropped sharply to below $65 per barrel.
The BSP is widely expected to cut interest rates by another 25 basis points today due to easing inflation as well as slower-than-expected gross domestic product (GDP) growth in the first half.
Diokno said the country’s GDP growth may hit six percent or within the lower end of the government’s six to seven percent target despite the sluggish performance in the first semester.
The economy grew by a slower 5.5 percent in the second quarter from 5.6 percent in the first quarter due to the US-China trade war and the impact of the delayed implementation of the 2019 national budget.
Source: https://www.philstar.com/business/2019/09/26/1954937/bsp-further-cut-2019-inflation-forecast#WfMt3QGIeXz03fsy.99