BSP: Nov inflation may remain tame, settle at 1.1-1.9%
Inflation in the Philippines may have stayed below the central bank’s target in November, despite upward pressure from recent typhoons and a weaker peso, strengthening the case for another interest rate cut before the end of the year.
The consumer price index likely rose between 1.1 percent and 1.9 percent last month, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
If confirmed, the figure, due from the Philippine Statistics Authority on Dec. 5, may beat the 1.7 percent clip in October.
Even so, the central bank’s forecast suggested that price gains may have settled below the official 2 to 4 percent target range for the ninth straight month.
The BSP said the impact of powerful storms that battered the country late in the season may have made rice, fish and fruits costlier this month.
It also did not help that a weak peso, which sank to new record lows, pushed up prices of key imports like oil.
But the central bank said these factors were “partially offset by lower prices of meat and vegetables.”
Overall, tame inflation could give the BSP enough room to further cut borrowing costs and support the economy amid mounting challenges at home and abroad.
In October, the Monetary Board cut the key interest rate by 25 basis points to 4.75 percent, aiming to steady business sentiment shaken by a widening probe into allegedly dubious flood control projects.
Government spending
The central bank had also warned that the corruption scandal could limit the ability of government spending to support growth.
True enough, the state’s economic managers already acknowledged that hitting even the lower end of the government’s growth target for 2025 would be very challenging, after the economy expanded 4 percent in the third quarter, the weakest pace in four years.
BSP Governor Eli Remolona Jr. earlier said another rate cut in December was “possible,” but ruled out any aggressive easing that could fuel concerns the economy is careening toward a hard landing.
Remolona added that the economy may “more than catch up” with the momentum lost by 2027, believing that the slowdown may prove to be short-lived. The pace of that rebound, he said, would determine how much further the central bank could ease policy in the months ahead.
“Going forward, the BSP will continue to monitor evolving domestic and international developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy formulation,” the central said.
