MikeLigalig.com

By Joann Santiago

The Bangko Sentral ng Pilipinas (BSP) believes that the average rate of price increases this year would remain below the midpoint of the three to five percent target even as upside risks turn up.

In a briefing at Malacanang Friday, BSP Governor Amando Tetangco Jr. said they see inflation to average at 3.6 percent this year, lower than the 3.8 percent actual average in 2010.

He explained that their average forecast already included the possible hikes in toll fees and oil and rice prices, among other factors.

He stressed that if these upside risks materialize, then inflation would average around 3.8-4.2 percent.

“It’s still around the midpoint of the target range for 2011. Inflation outlook is favorable as inflation expectations, based on our survey, continue to be within the inflation target range for the year,” he said.

Tetangco, who confirmed Thursday night that he has accepted President Benigno S. Aquino III’s offer for another six-year term as BSP head starting August this year, noted that inflation has started to rise in other Asian countries, thus, monetary officials in some of these countries have lifted price controls, which in turn resulted in increases in interest rates.

“In our case, inflation remains favorable and we don’t see an urgency for changing our monetary policy stance at this point,” he said.

Relatively, Tetangco said they plan to continue putting in reforms in the country’s financial system to strengthen economic foundation of macroeconomic analysis vis-à-vis the monetary policy.

“What we intend to do is to sharpen our tools in order to make monetary policies even more responsive and even more effective in maintaining price stability,” he said after citing BSP’s mandate of maintaining price stability and a sound banking system.

The BSP chief said they have started, at the early part of this month, internal capital adequacy assessment program to check if banks' capital remains sufficient to cover risks they have taken in.

“We will try to have stronger academic grounding for our assessment to monetary policy and then at the same time, we’d like to have sustained exchange of information with our counterparts around the region and in the other regions as well,” he added.

Meanwhile, Tetangco said they expect inflows from Filipinos abroad to reach US$ 20 billion this year.

As of last November, remittance totaled to US$ 17.1 billion, 8.2 percent higher than year-ago’s US$ 15.78 billion, with the growth already ahead of the eight percent full-year target of the central bank. (PNA)

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