October inflation seen higher, but BSP to keep rates steady: Reuters poll

Reuters

Posted at Nov 06 2017 05:06 PM

MANILA - Philippine inflation probably hit a three-year peak in October but still remained within the government's target range, likely giving the central bank comfort to keep monetary policy settings steady on Thursday, a Reuters poll showed.

The consumer price index is expected to have risen by 3.5 percent last month from a year earlier due to a weaker peso and higher fuel prices, according to the median forecast of 12 economists.

The estimate was at the middle of the central bank's forecast range of 3.2-3.7 percent. The October CPI data is due on Tuesday, two days ahead of the central bank meeting.

Inflation averaged 3.1 percent in the nine months to September, just above midpoint of the official target of 2-4 percent for this year. 

Policymakers have kept policy settings steady since the September 2014 rate hike of 25 basis points, as inflation has remained within the central bank's comfort zone despite a continuing robust growth of the domestic economy.

The central bank set the main rate at 3.0 percent when it moved to an interest rate corridor in June last year to make policy transmission faster. 

Most analysts in the same poll believed the Bangko Sentral ng Pilipinas (BSP) would keep key rates steady on Thursday and for the rest of the year. 

Two predicted a 25-basis-points rate hike as early as this week to keep demand driven price pressures in check.

"The combination of strong domestic demand, rapid growth in consumer credit and upside risks to inflation are likely to result in the BSP having a tightening bias for monetary policy settings in late 2017 and early 2018," said Rajiv Biswas, Asia Pacific chief economist at IHS Markit.

Third-quarter GDP data, due to be released on Nov. 16, would likely show the economy grew faster than the previous quarter's 6.5 percent, according to economic planning chief Ernesto Pernia, driven by strong domestic demand and farm sector.