MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) may lower its forecasts amid signs inflation is nearing its peak after rising to a fresh five-year high of 4.6 percent in May.
BSP Governor Nestor Espenilla Jr. said in a speech during the Philippine economic briefing in Tokyo, Japan there are definite signs that inflation is slowing down and may be close to peak.
Inflation averaged 4.1 percent in the first five months, exceeding the BSP’s target of two to four percent due to higher oil prices as well as the impact of the implementation of Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
“This was driven largely by supply-side factors particularly the significantly higher global oil prices, food supply disruptions, and higher excise taxes,” he said.
Based on its latest assessment last May 10, the BSP raised its inflation forecasts to 4.6 percent this year and to 3.4 percent next year.
“It is possible we will revise downwards with more data becoming available,” Espenilla said.
The last time the BSP’s inflation target of three to five percent was breached was in 2008 when inflation averaged 9.3 percent due to elevated global oil and food prices.
“The BSP remains strongly committed to maintaining a favorable inflation environment and we stand ready to timely adjust our policy settings to achieve our inflation target,” the BSP chief said.
Economists and analysts expect the BSP to deliver another rate hike during its scheduled rate-setting meeting today.
“We stand ready to adjust further as may be necessary to keep inflation expectations well anchored,” Espenilla said.