Inflation to stay within 2011 target range – BSP

Despite the devastation caused by Typhoons Pedring and Quiel which ravaged the rice growing regions of central and northern Luzon, inflation will stay within the 3-percent to 5-percent target range this year, the Bangko Sentral ng Pilipinas (BSP) said Monday. The final assessment of the damage done by “Quiel" and “Pedring," however, will be made during the Monetary Board meeting on Oct. 20, BSP Gov. Amando Tetangco Jr. said in an interview with reporters Monday. The board, — Bangko Sentral’s policy-setting body — will take a closer look at the impact of those typhoons on consumer prices, according to the central bank chief. “In the review that will be done, the impact of the typhoon will have to be considered and, as a usual practice, we will review inflation forecast and consider a revision if we see a need," Tetangco said. Inflation eased to a four-month low of 4.3 percent in August from 4.6 percent in July, with the eight-month average settling in at 4.3 percent from 4.2 percent a year earlier. The central bank said it expects the September inflation within the 3.8-percent to 4.8-percent range. "Prices of vegetables and canned goods, and the peso's movements appear to be the dominant price factors this month," Tetangco noted. "But given everything, the inflation rate for 2011 will still be within the target range," Tetangco added. The BSP’s inflation target in the 2011-2014 period was 3 percent to 5 percent. Reasonable growth It kept the policy interest rates unchanged for the third consecutive meeting since May 5 because of the lower- than-expected second quarter gross domestic product growth in the second quarter and the benign inflation outlook after oil and food prices have stabilized in the world market. Last March 24, the Monetary Board raised interest rates by 25 basis points and by another 25 basis points last May 5 which brought the overnight borrowing rate to 4.5 percent and the overnight lending rate to 6.5 percent. The country will manage to post reasonable growth amid stable inflation while areas in central and northern Luzon recover from Typhoons Quiel and Pedring, Tetangco said. "We know that the Philippines and the Filipinos are resilient, and will recover from this calamity. The good news is that the Philippines’ stable macroeconomic fundamentals and improved fiscal bottom line place our country in a good position to deal with both natural calamities and economic and financial volatilities," according to the BSP chief. "The Philippine economy is moving from strength to strength. It continues to show resilience amid the challenging global environment with GDP growing by 3.4 percent in the second quarter of 2011 and averaging 4 percent in the first semester of this year — higher than most of our neighboring countries in Southeast Asia," he said. Year-on-year, however, the GDP grew slower at 4 percent in the first half from 8.7 percent. Still, Tetangco said the Philippines registered 50 consecutive quarters of positive GDP growth since 1999. — VS, GMA News