Poll: RP inflation at 2.57% in March

Philippine consumer prices in March may have risen at the same pace they had in February, a GMANews.TV poll of three economists showed. The median average of the poll showed inflation for March coming in at 2.57 percent, almost flat from its 2.6 percent showing in February. The National Statistics Office is set to release inflation data on Wednesday. Development Bank of Singapore analyst Su Sian Lim, who gave an inflation estimate of 2.4 percent, said that the continuing strength of the peso has countered any inflation brought about by the increase in oil prices. Emilio Antonio, an economist from the University of Asia and the Pacific, also said he saw no indication that consumer prices had a drastic change in March. "There's no big factor to disrupt the trend that consumer prices are going," he said in a telephone interview. He expects inflation to come in at 2.5 percent. George Worthington, IFR Markets chief economist, said inflation last month may have accelerated to 2.8 percent, but should still be a prompt to the Bangko Sentral to cut interest rates. Worthington argued that the expected 2.8-percent inflation "may finally convince the central bank that it is more at risk of undershooting than overshooting its 4 percent to 5 percent inflation target for the year and prompt it to cut rates for the first time since 2003." While Worthington believes that the inflation rate should convince the BSP to cut rates, DBS' Lim said, however, that the BSP will most probably stick to its current monetary policy in the short term. Lim said that the central bank's main concern is the surge in domestic money supply. "Easing inflation does not give the central bank any basis to cut interest rates...But this does not mean rate hikes either; the policy approach has been to use quantitative measures... and this will probably continue to be the case until money supply growth is controlled," Lim said. The latest central bank data showed domestic liquidity growing 22.4 percent in February, prompting officials to assure the market that the expansion in money supply is still not inflationary. The BSP has kept interest rates steady since a 25 basis point hike in October 2005. The central bank has an overnight borrowing rate of 7.5 percent and an overnight lending rate of 9.75 percent.-GMANews.TV