by pna
The central bank revised upwards its inflation forecasts for this and next year given the faster rate of price increases last January as well as additional petitions for power hikes.
The outlook for the two-year period were increased to 3.3 percent from three percent and 3.2 percent for 2013 and 2014, respectively.
“The main driver for the higher 2013 forecast is because of the higher actual outturn for January inflation,†Bangko Sentral ng Pilipinas (BSP) Assistant Governor Cyd Tuano-Amador said in a briefing Thursday.
Rate of price increases stood at three percent last January, higher than the previous month’s 2.9 percent and was at the higher end of the central bank’s 2.5-3.4 percent inflation forecast for the month.
Amador said they have incorporated in their earlier forecasts power rate hikes approved by the Energy Regulatory Commission (ERC) but pointed out that there are new power rate increase petitions.
She also noted that inflation rate in the country is “driven by backward looking or inertial component†thus, the expectations of higher rate of price increase for the two-year period.
Amid the higher inflation forecasts for the two-year period, BSP Governor Amando Tetangco Jr. said projections for both period remain at the lower half of the government’s three to five percent target.
He stressed that the “inflation environment over the policy horizon is likely to remain manageable.â€
He pointed out that because inflation continue “to be firmly anchored†central bank’s policy-making Monetary Board (MB) was able to fine-tune the central bank’s policy tools by further reducing the interest rate of the special deposit account (SDA) facility instead of touching the BSP’s key rates.
On Thursday, the Board slashed the SDA interest rates by another 50 basis points to 2.5 percent, a decision made after the first cut in the previous policy-rate setting meet last January.
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