BSP: September Inflation likely eased to 2% on stable food prices

The Bangko Sentral ng Pilipinas (BSP) said Tuesday September inflation likely settled within a range of 2 percent to 2.8 percent.

The projection is lower than the 3.3-percent actual inflation rate in August and within the government’s target range of 2 percent to 4 percent for the year.

“Negative base effects along with lower prices of food commodities including rice, meat and vegetables as well as lower domestic oil prices, and the appreciation of the peso are the primary sources of downward price pressures for the month,” the BSP said.

“These are expected to offset the higher prices of fish and fruits and electricity rates. Going forward, the Monetary Board will continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment,” it said.

Robert Dan Roses, chief economist at Security Bank, also predicted that inflation in September would ease to 2.5 percent on slower food prices.

“However, potential risks from oil and typhoons may keep the BSP cautious about interest rate cuts,” Roces said.

“The central bank is likely to opt for a gradual approach, with 25-basis point reductions in October and December,” he said.

BSP Governor Eli Remolona Jr. earlier hinted the central bank may cut the overnight borrowing rate by 50 basis points in the next two policy meetings.

The BSP’s Monetary Board in its August meeting slashed its overnight borrowing rate by 25 basis points to 6.25 percent.

The interest rates on the overnight deposit and lending facilities were also reduced to 5.75 percent and 6.75 percent, respectively.

The US Federal Reserve earlier cut its interest rates by 50 basis points amid falling inflation in the world’s largest economy.