BSP vows continued monitoring of risks to inflation, investors’ sentiment

By Joann Santiago

MANILA, March 5 (PNA) — Rate of price increases slightly slowed to 4.1 percent in February 2014 from the 25-month high of 4.2 percent last January but the Bangko Sentral ng Pilipinas (BSP) vowed to remain watchful of risks to inflation.

In a text message to reporters Wednesday, BSP Governor Amando Tetangco Jr. noted that inflation rate in the second month this year is within the central bank’s 3.8 to 4.6 percent forcast for the month, with the downward movement attributed to slower inflation rate of some commodities and the transport index.

”The steady reading will help keep the average inflation over the policy horizon within the government’s target range,” he said referring to the three to five percent target for this year.

The central bank chief said monetary officials will ”continue to monitor global developments, especially as these impact on investor sentiment and domestic financial markets.”

He said ”spillover effects that might result in volatilities in international commodity prices” will also be watched out for.

Developments in both the lending situation in the country as well as expansion of domestic liquidity will also be monitored, he said.

For one, growth of domestic liquidity or the total money circulating in the economy continue to rise at a high pace compared in the past years, with the January 2014 level at above 38 percent.

Monetary officials, on the other hand, maintained that its expansion remains healthy and is not inflationary since productive capacity of the domestic economy has also risen.

Tetangco added that the BSP will also ”make adjustments to policy levers as appropriate to ensure that liquidity continues to be channeled to productive sectors of the economy, and that inflation expectations remain well-anchored.” (PNA)