MANILA, Philippines – Economist and monetary authorities say that the probability of inflation rate to reach the 4% mark is minuscule despite the hike in consumer prices in the previous months.
According to Amando Tetangco, the Banko Sentral ng Pilipinas governor, the inflation rate is very unlikely to hit the central bank’s 2-4% target for 2017.
He said that the current forecast estimates that the inflation will peak closer to 4% but will not reach a four percent mark. After that, it will start to decline.
Inflation was a steady 3.4% in the month of April which makes it an average 3.2% in the first quarter including April.
The last four-percent mark was hit in October 2014 when consumer prices rose faster to 4.1% from 3% in 2013.
Tetangco said that the slow and gradual increase of the inflation is expected to continue until the 4th quarter of this year. The trend shows a gradual incline in the inflation until the 3rd quarter, but it will remain below the 4% target.
Last March 23, in the meeting for the rate-setting of the BSP’s monetary board, inflation forecast was reduced to 3.4% from 3.5% for this year and a flat 3% from 3.1% for the next year.
Tetangco explained that the changes were due to the different inflation assessment since the last meeting. He said that the valuation before was based on the inflation which was staying on the target mark.
According to him, adjusting the interest rate is very unlikely because the inflation rate is estimated to remain on the target mark. He also said that trends and direction do not bind them in making their policies, but they are still on the watch for the developments.
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