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INFLATION DECELERATION GIVES BSP FLEXIBILITY TO ADJUST POLICY RATES – GATCHALIAN

Senator Win Gatchalian said the deceleration of the country’s headline inflation to 2.7 percent in June would give the Bangko Sentral ng Pilipinas (BSP) more elbow room to adjust policy rates.

Gatchalian, chair of the Senate committee on economic affairs, said the BSP could start easing its policy stance to help the country’s growth trajectory back to 6 percent.

“The country’s headline inflation rate has eased to 2.7%.”

“The country’s headline inflation rate has eased to 2.7% after seeing a slight uptick in May. The inflation rate for June is actually lower than the average 2.9% forecast of different economic analysts and our own internal estimates,” the legislator said.

“The better-than-expected June inflation result will provide the Bangko Sentral ng Pilipinas with more flexibility to implement policy adjustments, such as cutting key policy interest rates and the reserve ratio requirement for banks, which will help spur the economy and lift the country’s gross domestic product back to 6%, after dropping to a 4-year low of 5.6% in the first quarter of 2019,” the lawmaker added.

The price increase for basic commodities for last month was the lowest in 22 months.

The Philippine Statistics Authority (PSA) reported that the inflation rate slowed down to 2.7 percent in June from May’s 3.2 percent. The price increase for basic commodities for last month was the lowest in 22 months.

“The slowdown of inflation in June 2019 was mainly driven by slower annual rate posted in the index of the heavily-weighted food and non-alcoholic beverages at 2.7%,” the PSA said. 

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