BSP keeps eye on global headwinds after Feb. inflation crawls to 2.5%

Policy rates are still appropriate despite a slight inflation uptick in February, but the Bangko Sentral ng Pilipinas (BSP) is keeping a keen eye on global developments that may impact on prices.

 

"Inflation over the policy horizon is seen to remain manageable," BSP Governor Amando Tetangco Jr. told reporters in a text message on Thursday.

 

The central bank chief issued the statement after the government revealed that inflation in February crawled to 2.5 percent from 2.4 percent a month earlier.

 

Last month's inflation rate was within the BSP forecast of 2.2 percent to 3 percent.

 

The two-month average of 2.4 percent is also within the full-year target of 2 to 4 percent this year set by the Development Budget Coordinating Committee (DBCC).

 

Moving forward, Tetangco said the central bank is still mindful of overseas developments that could impact prices.

 

"While we see the stance of policy still appropriate at this time, we continue to watch global developments, including possible strong reversals in oil price trends and changes in investor sentiment which could create market volatilities and affect inflation expectations," he said.

 

Last month, BSP Deputy Governor Diwa Guinigundo said the central bank can afford to leave interest rates unchanged for some time. 

 

The central bank has kept the rates steady since October 2014 when monetary policy was last tweaked with a 25-basis-point increase. 

 

The BSP has ample space to keep interest rates on hold even if the US central bank tweaks higher its benchmark yield later in the year, according to British banking giant HSBC Corporation Ltd. – VS, GMA News