Philippine banko sentral February inflation estimate

Posted By on February 28, 2012

MANILA, Feb 28 (Reuters) – Inflation in the Philippine could ease to below 3 percent for the first time in more than 2 years in February, the central bank said on Tuesday, strengthening the case for a second policy rate cut this week.

Annual inflation will likely maintain its downward trend in February, with the rate expected to be between 2.7 percent to 3.6 percent, on lower utility rates, strong peso and base effects, Governor Amando Tetangco told reporters in a mobile text message.

“Over the policy horizon, inflation is forecast to continue to be manageable, barring oil supply surprises due to any acceleration in the tensions in the Middle East,” Tetangco said.

“For 2012 and 2013, full year average inflation rates are forecast to fall below the midpoint of the target range of 3 to 5 percent.”

The low end of the central bank’s forecast is the lowest since October 2009 when the rate was 2.8 percent, while the upper end of the range matches the rate in December 2011.

Analysts in a Reuters poll released on Monday forecast February inflation at 3.4 percent.

The central bank will continue to assess the impact of global developments on domestic inflation to see if there is a need to adjust monetary policy, Tetangco said.

Analysts widely expect the Bangko Sentral ng Pilipinas to follow up with a second 25 basis point policy rate cut on Thursday, after reducing rates for the first time in 2-1/2 years in January, taking advantage of a slowing inflation to support growth.

A quarter point cut would bring the overnight borrowing rate, a level last seen during the 2009 global crisis, the lowest on record.

The policy-making Montery board will review policy ahead of the official release of the February inflation data on March 6.