BSP sees opening to lower inflation

Posted at 07/29/14 7:59 PM

MANILA – The Bangko Sentral ng Pilipinas (BSP) on Tuesday said that a projected slowdown in global growth will allow it to adjust policy settings that will help temper the rise in inflation.

"Slower growth could help keep global inflation in check and could lead to more sustainable growth in the medium to long term," BSP Governor Amando Tetangco Jr. said.

"This could provide us policy space and room to maneuver as we use this period to strengthen our own domestic sources of growth--agriculture and industry, as well as consumption--and build the necessary infrastructure that will create the base for a more solid economic growth trajectory going forward," he added.

In the latest World Economic Outlook of the International Monetary Fund (IMF), the full-year forecast for global economic expansion was slashed to 3.4 percent from 3.6 percent.

The downgrade was attributed to a weak first quarter and less bullish prospects for several emerging markets for the rest of 2014.

IMF also lowered its forecast for Philippine economic growth this year to 6.2 percent from 6.5 percent after a weak first quarter performance.

The Monetary Board, meanwhile, has maintained key rates since the start of the year as inflation targets remain within the 3- to
5-percent range.

As of June, inflation went above the midpoint of the target range at an average of 4.2 percent as food prices continue to rise.

The Monetary Board will revisit its policy settings on Thursday, July 31.