BSP: February inflation quickens to 9-mo. high

Philippine inflation surged in February to a nine-month high on rising food and housing cost, the Bangko Sentral ng Pilipinas (BSP) said Friday. Consumer prices rose 4.3 percent year-on-year after climbing a revised 3.6 percent in January, the BSP said in a statement. February inflation surpassed central bank's forecast of 3-4.1 percent. The BSP sees inflation to settle between 3 percent and 5 percent from 2011 to 2014. For this year, the inflation will average at 4.4 percent, from 3.5 percent in 2010, according to the bank. "It is important to remember that the BSP looks at expected price movements over a longer policy horizon, and not simply on contemporaneous inflation," BSP Gov. Amando Tetangco Jr. said. Its benign inflation outlook has allowed the Bangko Sentral to keep the overnight borrowing rate at a record low 4 percent and the overnight lending rate at 6 percent since July 2009. Tetangco said the scope for keeping interest rates at record lows has narrowed. "The BSP is ready to make any adjustment [of] its policy stance as and when necessary," he pointed out. The next policy-setting meeting of the Monetary Board is set for March 24. The year-to-date inflation averaged 3.9 percent, within in the central bank's target range of 3-5 percent for 2011. "We think the anxiety about the BSP being behind the curve is overdone but that it will persist until inflation fears subside, which we don't expect will happen in the first half of 2011," ING Bank economist Tim Condon said in a note. — JE, GMA News