PHL likely to meet 2011 inflation target – BSP

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. declared that the country’s is “poised to meet the full-year inflation target" of 5 percent after the rise in the consumer price index in August eased to 3.4 percent and brought average inflation for the first eight months of the year at 4.3 percent. With this development and the slowdown of the domestic economy in the first half, “the stance of monetary policy will have to be supportive of sustained growth for the economy," Tetangco. The BSP chief said there is now “more elbow room to keep interest rates steady in light of the lower than expected economic growth booked in the second quarter of the year." Several economists and analysts had anticipated the lower output of the Philippine economy and the consequent impact on interest rates. The Hong Kong and Shanghai Banking Corp. said the BSP might maintain its benchmark rates until the first quarter of next year. The Union Bank of Switzerland (UBS) said buoyant credit growth plus pressures to harmonize regional trade policies will also factor into the decision-making of the BSP in the next several months. Local bank loans to industries have stayed above at least P2 trillion since November last year. Tetangco said the BSP needs “to provide support to productive activities" and will now look more closely at the capital flows in the financial system to make sure monetary policy matches any changes in the developing scenario. — ELR/VS, GMA News