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MANILA,
July 5 (PNA) – The Bangko Sentral ng Pilipinas (BSP) believes that
demand pressures will start to moderate as the central bank tightens
the rates to slow inflation and bring it to normal cycle by early 2009.
“Demand
pressures will moderate as monetary policy is generally tightened. For
RP, we should be back to normal cycle by early next year,” said BSP
Governor Amando Tetangco Jr. in a text message to reporters Friday.
He
made the statement after the June 2008 inflation surged to double-digit
11.4 percent from the revised 9.5 percent last May and far higher than
the 2.3 percent year-ago.
The latest figure is higher than the 10.4 percent to 11.2 percent forecast of the central bank.
It is also near the 11.5 percent rate in May 1994, the National Statistics Office (NSO) said Friday.
This brings to 7.6 percent the average inflation in the first six months of the year.
Core
inflation, which excludes volatile items like food and energy, is now
at 6.6 percent from 6.2 percent in the previous month.
Tetangco
said the double-digit rate of price increases last June was as expected
“on account of unprecedented jump in world oil prices.”
He
explained that “as a result, domestic pump price increases triggered
large price buildup across wide commodities and services groups.”
He
reiterated their earlier statement that inflation would reach its
height in the third quarter this year before going down in the last
quarter, which is the reason the central bank sees that the 2.5 percent
to 4.5 percent inflation target for 2009 attainable.
BSP
earlier said that because of the continued rise of inflation, the three
to five percent inflation target for this year will be surpassed and
was seen to average between seven to nine percent this year.
On the other hand, inflation is projected to average between four to six percent next year.
As
prices of oil, which is now at record level at $ 146 per barrel
continue to rise, Tetangco added that “we share the view that current
oil and food prices are hardly sustainable, producing global slowdown
and widespread inflation in all countries.”
And
because of the continued upsurge in food and oil prices that results to
higher inflation, central bank's policy-making body, Monetary Board
(MB), decided to increase policy rates by 25 basis points early last
June after noting that supply-driven pressures are beginning to feed
into demand side.
Central
bank officials hinted another rate hike but declined to say when they
plan to implement it, saying they continue to monitor developments in
the economy.
The
MB is scheduled to have their next rate setting on July 17 and analysts
project another hike in the central bank rate after the meeting. (PNA)
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