bus4-inflation_2019-07-04_19-41-21

Philippines: BSP chief sees below 2% inflation in Q3

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) said inflation may ease below two percent in the third quarter, giving monetary authorities more room to cut interest rates further.

BSP Governor Benjamin Diokno said in an interview inflation in the third quarter may drop further compared to the second quarter figure.

“If we just look at the base effects, third quarter (inflation rate) can really be around two percent or even lower. So third quarter will be much lower than the second quarter,” he said.

Inflation averaged 3.6 percent in the first five months despite the slight uptick to 3.2 percent in May from three percent in April.

For June alone, the BSP’s Department of Economic Research (DER) expects inflation to ease to a range of 2.2 to three percent.

The last time inflation fell below two percent was in October 2016 at 1.8 percent.

On the other hand, the country’s gross domestic product (GDP) growth eased to a four-year low of 5.6 percent in the first quarter from 6.3 percent in the fourth quarter.

This allowed the BSP to slash interest rates by 25 basis points last May 9, reversing a tightening cycle that saw benchmark rates rise by 175 basis points last year to prevent inflation from spiraling out of control.

Diokno said the BSP has enough room to further cut interest rates this year.

“We have a lot of policy space considering the global trend of monetary easing. Just be patient. We’ll get there eventually,” the BSP chief said.

Source: https://www.philstar.com/business/2019/07/05/1932039/bsp-chief-sees-below-2-inflation-q3#0o6f2IkiGlgkM35d.99