Officials still ready to adjust monetary settings
By Paolo G. Montecillo
Philippine Daily Inquirer
10:39 pm | Thursday, December 5th, 2013
The effects of recent natural calamities on consumer prices will likely be short-lived as reconstruction efforts address infrastructure bottlenecks that constrict the supply of food and other key commodities.
The Bangko Sentral ng Pilipinas (BSP) on Thursday said that while it expected inflation to rise further in the coming months, similar instances in the past have shown that the elevation in consumer prices were temporary.
“We could see inflation inch up in the coming months as more of the effects of the calamities become known,” BSP Governor Amando M. Tetangco Jr. said. “Nevertheless, as experience in past natural calamities has taught us, we do not see these effects persisting.”
Government documents released Thursday showed that average consumer price inflation for November rose to 3.3 percent from 2.9 percent the month before. This matched the lower end of the BSP’s projected range for the month of 3.3 percent to 4.1 percent.
Inflation in November was the highest since last March, when consumer prices rose by an average 3.4 percent.
Tetangco noted that while monetary authorities still saw full-year inflation for 2013 and 2014 to fall within the BSP’s target range of 3 to 5 percent for both years, monetary officials were ready to adjust policy settings to fight price pressure, if needed.
“Policy settings remain appropriate, but we stand ready to make adjustments as and when needed to address unforeseen developments,” Tetangco said. The BSP’s benchmark overnight borrowing and lending rates have been at record lows of 3.5 and 5.5 percent, respectively, for more than a year.
The BSP, whose primary mandate is ensuring stable consumer prices that promote economic growth, attributed the increase to higher food costs, real estate prices, and utility rate adjustments during the month.
These come following two major natural disasters to hit the country in the last quarter of the year. First was the 7.2-magnitude earthquake in Bohol last October, which was followed by Supertyphoon “Yolanda” the following month.
UBS senior economist for Southeast Asia Edward Teather said the BSP might be tempted to start raising interest rates next year due to improving economic conditions abroad, which relieves the pressure for the central bank to sustain its monetary stimulus for the local market.
“But as inflation will still likely be in line with the target of 3 to 5 percent, we think (the BSP) will hold off (until 2015),” Teather said.
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Tags: Bangko Sentral ng Pilipinas , Business , calamities , Inflation
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