10 Apr 2019, 10:58 — 3 min read
Price levels for the last month was seen at 3.3%, according to the Philippine Statistics Authority (PSA), which is the same with the forecast of UnionBank’s Economic Research Unit (ERU).
ERU called last month at exactly 3.3%, as the deceleration of annual increases among all commodity groups was led by the heavily-weighted food and non-alcoholic beverages index. This is now the fifth (5th) month of inflation deceleration.
With 2019 inflation average now at 3.8%, well within the BSP’s inflation target of 2-4%, is BSP now ready to unwind the 175 basis points hike of 2018? Deputy Governor Diwa Guinigundo, before the inflation data release, flagged that monetary policy will only be eased “when inflation averages near the mid-point of a 2-4% target”.
ERU still maintains its view that the BSP will prioritize an RRR cut over an RRP move. For timing, RRR cut may come at the upcoming May 9th Monetary Board meeting, and an RRP cut may come as early as the third quarter.
Article by Ruben Carlo Asuncion
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