INFLATION could have risen last month but remained within target, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.
The central bank issued a 2.8- to 3.6-percent forecast for February inflation, official data for which will be released on Tuesday, March 5.
A 2.8-percent outturn would be unchanged from the January figure. Results in the rest of the range, while higher, fall within the BSP’s 2.0- to 4.0-percent target.
“Continued price increases for key food items, such as rice, meat and fish, along with increased petroleum prices and electricity rates, are the primary sources of upward price pressures for the month,” the central bank said in a statement.
“Meanwhile, lower prices of vegetables, fruits, and sugar could contribute to downward price pressures,” it added.
The BSP said it would “continue to monitor developments affecting the outlook for inflation and growth in line with its data-dependent approach to monetary policy decision-making.”
The central bank has warned that inflation could rise anew due to the impact of the El Niño weather pattern on food prices, possibly again topping 4.0 percent in the second quarter.
The average rate, however, is expected to settle within target this year and speculation continues as to when monetary authorities will begin cutting key interest rates.
The BSP’s benchmark rate currently stands at 6.5 percent, the highest since 2007, after 450 basis points of rate hikes beginning May 2022 as inflation started surging.
The last adjustment — an off-cycle 25-bps hike — came last October and the central bank’s policymaking Monetary Board has held fire during its last three meetings.
It next meets on April 4.
Many analysts expect the Monetary Board to keep policy setting unchanged during the first half of the year and only act once the US Federal Reserve begins easing.
BSP Governor Eli Remolona Jr. has said that rate cuts in the latter part of the year are likely but also stressed that further hikes cannot be ruled out.
ING Manila Bank senior economist Nicholas Antonio Mapa said that with inflation likely remaining within target in February, key rates would again remain unchanged in April.
“We’ve seen how quickly the BSP’s risk-adjusted inflation forecasts have fallen, and we could see price pressures ease further in the coming months,” he added.
“If this does happen, BSP will have substantial space to consider cutting rates ASAF (As Soon as the Fed does).”