Pinoy Biztalk and Jobs: BSP's June inflation forecast hits upper end of full-year target range

Jun 30, 2014

BSP's June inflation forecast hits upper end of full-year target range

MANILA - Inflation at the close of the first half of this year likely accelerated on costlier food, education and transportation.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said price increases in June may have averaged between 4.1-5 percent, or at the upper end of the central bank’s full-year target range of 3-5 percent.

“The elevated forecasts reflects a combination of – on the upside – increases in prices of certain commodities including rice, tuition fee hikes and provisional fare rate increases,” Tetangco said.

These, however, are expected to be partially tempered by the downward adjustments in electricity rates and a stronger peso, he said.

Despite the higher forecast for last month, Tetangco said the full-year figure would still be “within target,” adding that the BSP is ready for another policy action if the target is threatened.

“That said, we are watchful of domestic factors as well as external developments that could fuel second round effects and fan any financial stability pressures,” he said.

“We will continue to mark developments to see which policy lever would be adjusted, if any is needed, so as to ensure our goals [of] price and financial stability remain within view,” he added.

Last May, inflation hit a 2-and-a-half year high of 4.5 percent, bringing the 5-month average to 4.2 percent, or above the mid-point of the full-year target range.

In its last policy meeting, the Monetary Board hiked its full-year inflation forecasts for this year and in 2015 to 4.4 percent and 3.7 percent, respectively. It kept policy rates, but increased the yield on the central bank's special deposit accounts to temper the expansion of domestic liquidity.

Source:http://www.interaksyon.com/business/90135/bsps-june-inflation-forecast-hits-upper-end-of-full-year-target-range