British bank Standard Chartered said Monday the Bangko Sentral ng Pilipinas may reduce the current policy rates in the coming months, if inflation rate falls below 2 percent.
“We see a higher possibility of policy rate cuts if inflation stays persistently below the 2 percent to 4 percent target set for this year,” the bank said in a report.
Standard Chartered said in February, inflation rate likely remained unchanged at 2.4 percent, supported by lower prices of oil. The Philippine Statistics Authority is set to release the February inflation data on March 5.
“We expect inflation to have been unchanged at 2.4 percent [year-on-year], representing a 0.1 percent [month-on-month] increase. Energy inflation likely continued to drop due to lower crude oil prices,” the bank said.
It said electricity prices fell 11.3 percent in January from a year ago, and had been on a steady downtrend since the 5.4 percent increase in October 2014.
“Similarly, prices of fuels and lubricants fell 13.1 percent y/y, following a 0.2-percent increase in October 2014. Meanwhile, food inflation has remained above the levels seen in 2012 and 2013,” it said.
Inflation rate decelerated to 2.4 percent in January from 2.7 percent in December last year. It was also slower than the 4.2 percent recorded in January 2014 and was the slowest since it settled at 2.1 percent in August 2013.
Bangko Sentral Governor Amando Tetangco Jr. earlier said inflation in February likely accelerated from January due to higher electricity and water rates coupled with the rebound in prices of oil in the world market.
Tetangco said February inflation likely settled in the range of 2.2 percent and 3 percent as higher cost of power and water as well as the recovery in oil prices implied some upward inflation pressures.
Crude prices fell by almost 50 percent in 2014 to less than $50 a barrel, after the Organization of Petroleum Exporting Countries moved to defend market share amid a global glut.
Local pump prices also dropped, translating to lower transport fares and cheaper electricity rates.
Oil companies in the latter part of February raised pump prices by P0.85 per liter for gasoline and P0.80 per liter for diesel. Shell also raised the price of kerosene by P1 per liter. The price increases took effect on Feb. 24.
Phoenix Petroleum said the increase reflected the continued upward movements in the prices of refined petroleum products in the world market.
Meanwhile, power distributor Manila Electric Co. hiked electricity rates by P0.84 per kilowatt-hour, translating into an increase of P168 for small households consuming 200 kWh per month. The higher power rates in February came after three consecutive months of price reduction.