Philippine central bank to take ‘measured approach’ in easing as inflation steadies

THE Philippine central bank will take a “measured approach” in easing policy rates, it said on Wednesday (Feb 5), as annual inflation held steady at 2.9 per cent in January, staying within its target range.

The increase in the consumer price index (CPI) matched the previous month’s rate, but it was higher than the 2.7 per cent median forecast in a Reuters poll.

Last month’s inflation was consistent with the central bank’s view that inflation will stay within its 2 to 4 per cent target for the year despite upside risks, the Bangko Sentral ng Pilipinas (BSP) said.

The BSP, which flagged a fourth consecutive 25 basis point rate cut at its Feb 13 meeting, said it will “maintain a measured approach to monetary policy easing to ensure price stability”.

Core inflation, which strips out volatile food and energy prices, slowed to an annual 2.6 per cent in January from 2.8 per cent in December.

Food inflation, which accounted for nearly half of last month’s CPI print, rose 4 per cent year on year in January from 3.5 per cent as higher vegetable prices offset the decline in rice prices.

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Rice prices contracted 2.3 per cent in January from December’s 0.8 per cent rise. It was the first time prices have contracted since December 2021, and that trend will likely persist until July, National Statistician Dennis Mapa told a briefing.

On Saturday, BSP governor Eli Remolona said the central bank could cut its key policy rate, currently at 5.75 per cent, by at least 50 basis points this year.

Remolona said a reduction in interest rates would support the economy, which grew a slower-than-expected 5.2 per cent in annual terms in the last quarter of 2024. REUTERS