MANILA – Philippine annual inflation likely returned to the central bank’s 2-4 percent target range in February, a Reuters poll showed, reducing the pressure on the central bank to tighten monetary policy.
Annual inflation is forecast to have slowed to a one-year low of 4.0 percent in February, according to the median view in a poll of 12 economists, due to cheaper food and fuel prices, and a strong peso.
January inflation was 4.4 percent, staying outside the central bank’s target range since March last year.
Inflation has been cooling due to easing oil prices and as the impact of higher and new taxes slapped by the government on certain commodities fades. The rate is expected to moderate further and probably hit below 4 percent this month, the central bank has said.
Given the improving outlook on inflation, it is possible that the central bank would start unwinding some of last year’s tightening, which should also bode well for economic growth, some analysts said.
Full-year inflation projections by seven economists out of the 12 in the poll produced a median estimate of 3.3 percent, well inside the central bank’s comfort range, and much slower than last year’s 5.2 percent average.
The central bank kept interest rates steady at its last two meetings and some economists expect policymakers to cut the rate on its overnight reverse repurchase facility and reduce banks’ required reserves this year.
To tackle inflation, which rose to a near decade high of 6.7 percent in September and October, the central bank hiked rates five times last year, totaling 175 basis points.
The central bank next meets to review policy on March 21. (ABS-CBN News)
