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Philippine central bank targets 2-4% inflation in 2017-2018

[MANILA] The Philippine central bank said on Tuesday it expects inflation to stay manageable over the medium term and set a 2-4 per cent inflation target for 2017 and 2018, the same as the goal for this year and next. "Structural changes in inflation dynamics and improvements in the economy's productive capacity support a low inflation environment that is consistent with the economy's growth trajectory," the central bank said.

Inflation has started to slow after hitting a peak in July and August last year due to cheaper food and fuel prices.

That has allowed the central bank to leave its key policy rate on hold at 4.0 per cent for a second meeting in December after five consecutive tightening moves to keep prices in check.

Some economists expect policymakers to stand pat on rates for the whole of 2015 after the Philippines closed 2014 as the fastest-growing economy in Asia after China, regaining momentum in the final quarter of the year.

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Inflation averaged 4.1 per cent last year, well within the central bank's 3-5 per cent target in 2014. Inflation has been within target in the last six years.