The central bank reduced its inflation forecast for this year and the next on the back of a lower February inflation reading, the impact of a weakening peso, and the delay in power rate adjustments.
For 2016, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) after its meeting on Wednesday March 23 adjusted its inflation forecast to 2.1 percent from 2.2 percent and lowered its forecast for 2017 to 3.1 percent from 3.2 percent.
It was the second Monetary Board meeting in as many months in which the inflation forecast was adjusted downward. The Monetary Board previously lowered the inflation outlook for 2016 from 2.4 percent to 2.2 percent at its February 11 meeting.
For March alone, the BSP said inflation could fall within a range of 0.6 percent to 1.4 percent, with downward adjustment in power rates and the strong peso offsetting higher local pump prices during the month.
“The BSP projects March inflation to settle within 0.6 percent to 1.4 percent range,” BSP Governor Amando Tetangco Jr. said in a text message to reporters.
Inflation decelerated to 0.9 percent in February from 1.3 percent in January. Data for March is scheduled to be released by the Philippine Statistics Authority on April 5.
Manila Electric Co. (Meralco) cut electricity rates by 19 centavos per kilowatt-hour this month because of lower generation charges.
This month, the peso hit its strongest level in five months against the US dollar when it closed P46.29 per dollar on March 22.
Meanwhile, seven oil companies declared an 85-centavo roll back in pump prices in the middle of the month.
“Looking ahead the BSP will remain attentive to evolving price trends to ensure that the monetary policy stance remains consistent with the mandate of preserving price stability conducive to sustained economic growth,” Tetangco said.