BSP: Policy stance remains appropriate

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NEDA wary of 2015 inflation risks
The Bangko Sentral ng Pilipinas (BSP) expects inflation to continue to ease this year and says that its policy stance of keeping interest rates low remains appropriate.

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The National Economic and Development Authority, meanwhile, said the government is still wary of inflation risks for 2015.

Socioeconomic Planning Secretary Arsenio Balisacan said the government is seeing price pressures that will arise with higher water rates at the start of the year and the impact of destruction brought by typhoons Ruby and Seniang on prices of agricultural commodities.

“Given the lingering possibility of El Niño occurrence in the first quarter of 2015, we should intensify efforts to implement programs that will help the areas that are highly and moderately vulnerable to the adverse impact of a dry spell,” he said.

The NEDA director-general also noted that logistical issues continue to pose risks of inflation.

“The easing of the truck ban in Manila’s ports may have contributed to temper last year’s inflation rate but it is critical to continue exploring a more lasting solution to the congestion problem to avoid future disruptions in the domestic supply chain that could result in higher transportation costs,” he said.

For his part, BSP Governor Amando Tetangco Jr. believes the risks to inflation are broadly balanced, and the outlook is for inflation to be within the national government target range of 2 percent to 4 percent.

Tetangco added that lower international oil prices should continue to counterbalance pending hikes on transport fares and utility charges.

The Philippine Statistical Authority reported that the country’s average headline inflation rate for 2014 was recorded at 4.1 percent or within the 3-percent to 5-percent target range of the government.

In a text message to reporters on Tuesday, Tetangco said “Our assessment for the time being is that the stance of policy is appropriate, but we are ready to make adjustments as needed to ensure our inflation objectives are met,” he said.

The Monetary Board of the BSP at its December 11 meeting decided to keep its existing rates for overnight borrowing and lending, as well as the special deposit account and the reserve requirement ratio for banks.

“BSP will continue to watch market developments, especially actions of advanced economies’ central banks and their potential impact on global market risk appetite and global growth prospects, which in turn could impact our own domestic markets and inflation dynamics,” he said.

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