July 15, 2010
|Higher growth won't stoke inflation – BSP | | | |By Lawrence Agcaoili |
MANILA, Philippines - Monetary authorities said yesterday that a higher economic growth next year won’t stoke inflation as long as the government manages to keep its budget deficit in check. Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the central bank could manage the impact of higher economic growth on inflation as long as the government’s budget shortfall is not premised on huge borrowing and wasteful public spending. “In fact, there were instances in the past when we achieved a great deal of convergence between high economic growth and stable inflation. That is close to an ideal situation that should be made durable over the long term,” Guinigundo stressed. The Cabinet-level Development Budget Coordination Committee (DBCC) has kept its revised gross domestic product (GDP) growth target of five percent to six percent this year but raised its GDP growth target next year to seven percent to eight percent. However, the DBCC decided to keep the inflation target of 3.5 percent to 5.5 percent this year and three percent to five percent for next year set by the BSP. The central bank is likely to lower its inflation forecast for this year and next year during its scheduled meeting today as inflation eased surprisingly to a seven-month low in June.
Last June 3, the central bank slashed its inflation forecast to 4.7 percent from 5.1 percent for this year and to 3.6 percent from 3.7 percent for next year in light of the reduction of power costs, lower oil prices, steady commodity prices, moderate liquidity growth, and the continued strengthening of the peso against the US dollar [pic]
.The latest inflation forecast also took into consideration the stronger-than-expected gross domestic product (GDP) growth registered in the first quarter of the year. The country’s GDP zoomed to its fastest pace in almost three years after expanding by 7.3 percent in the first quarter of the year from only 0.5 percent in the same quarter last year. Latest data from the National Statistics Office (NSO) showed annual inflation eased to a seven-month low of 3.9 percent in June form 4.3 percent in May bringing the average inflation to 4.2 percent for the first half of the year from 5.0 percent in the same period last year. Inflation last month was the lowest since 2.8 percent recorded in November last year. “If we succeed in reaching that point, the issue of inflation will be less of an issue because much of the supply side risks would be effectively addressed,” Guinigundo explained. According to him, Filipinos would have to do their share in helping the administration of President Benigno “Noynoy” Aquino III to achieve faster economic growth after the global economic meltdown.
July 14, 2010
|BSP expected to maintain policy rates | | | |By Lawrence Aqcaoili |
MANILA, Philippines - Economists and analysts believe that the Bangko Sentral ng Pilipinas (BSP) would keep its key policy rates unchanged during the meeting of the Monetary Board tomorrow. Singapore-based DBS Bank Ltd. and Switzerland-based UBS AG said the BSP’s policy-setting body is widely expected to keep its overnight borrowing rate and overnight lending rate steady on July 15. UBS economist Edward Teather said in its Asian Economic Comment entitled “Asean Monetary Policy Update” that unlike the Bank of Thailand the BSP is likely to keep its key policy rates unchanged this week. “We expect an initial 25 basis points policy rate increase from the Bank of Thailand on July 14 but not the BSP on July...