The Bangko Sentral ng Pilipinas revised downward the 2019 inflation forecast to 2.5 percent from the previous estimate of 2.6 percent amid the continued softening of consumer prices, Governor Benjamin Diokno said Wednesday.
“Based on BSP’s latest projection, inflation is expected to average at 2.5 percent for 2019, lower relative to the previous forecast of 2.6 percent [as of Aug. 8, 2019],” Diokno said.
“We take into account in the new forecast the bombings in Saudi Arabia. Also, we have no changes in oil assumptions and foreign exchange. Economic growth assumptions are the same,” Diokno said in an interview at the sidelines of a financial technology event called Finovation 2019 by eCompareMo.com at Manila Peninsula Hotel in Makati City.
Diokno said the government was confident of meeting the growth target this year. “We are still hitting 6 percent… the lower end of the target range of 6 percent to 7 percent for 2019,” Diokno said.
Inflation rate in August slowed to a 35-month low of 1.7 percent from 2.4 percent in July. Economists said this development could prompt monetary authorities to further reduce the policy interest rates in their meeting this week.
The Philippine Statistics Authority said the slowdown was due to slower increases in the prices of food and non-alcoholic beverages. The August print was the slowest since the 1.7 percent inflation in September 2016. This was also slower than 6.4 percent in August 2018.
This brought the average inflation in the first eight months to 3.1 percent or within the target range of 2 percent to 4 percent set by the government for 2019.
The Monetary Board cut the overnight borrowing rate by 25 basis points to 4.25 percent on Aug. 8, taking into account the continued downward trajectory of inflation rate. The interest rates on the overnight deposit and lending facilities were reduced to 3.75 percent and 4.75 percent, respectively.