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The Bangko Sentral ng Pilipinas (BSP) on Tuesday said the drop in the country’s inflation rate in September should be accompanied by measures to increase the domestic economy’s absorptive capacity and ensure its continued expansion.

Rate of price increases dropped to 3.5 percent in the ninth month this year from last August’s four percent and is below the lower end of the central bank forecast for the month of a range between 3.6-4.5 percent.

BSP Governor Amando Tetangco Jr., in a phone message to reporters, attributed this to the slower price adjustments across all commodity groups.

He said this development brings the full year average inflation for this year at the lower end of the central bank’s 3.5-4.5 percent inflation target for this year and “supports a manageable medium term inflation outlook.”

“Barring any unforeseen adverse price shocks, including volatility of international commodity prices, the BSP’s current stance appears appropriate,” he said.

Central bank’s policy-making Monetary Board (MB) decided to hold for the 10th consecutive rate setting BSP’s policy rates at record-low last August. These were kept low since July 2009.

To date, BSP’s overnight borrowing or reverse repurchase rate is at four percent while the overnight lending or repurchase rate is at six percent.

Tetangco, however, pointed out that “there continues to be a need to push for measures to improve absorptive capacity and to draw investments into employment generating projects.”

“This will ensure that the current monetary policy stance indeed translates into real economic growth that is sustainable,” he added. (PNA)

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