BSP says low inflation allows accommodative policy


Posted at Feb 11 2009 05:33 PM | Updated as of Feb 12 2009 01:34 AM

Central bank governor Amando Tetangco said on Wednesday a slowdown in inflation will allow authorities to maintain an accommodative monetary policy stance.

"Declining inflation and within-target inflation outlook have given the central bank room to be accommodative," Tetangco said in an economic forum. "We will therefore continue to look for opportunities to be supportive of economic growth."

The Bangko Sentral ng Pilipinas (BSP) has lowered its policy rates by a total 100 basis points in the last two months and analysts said further cuts were likely as authorities seek to boost the local economy which has been hit by the global slump in demand.

In January, inflation eased to a 10-month low of 7.1 percent, at the low end of the BSP's official forecast of 7 to 9 percent. Food and fuel items made the most significant impact in the consumer price index basket.

Core inflation, which strips out some volatile food and energy items, edged down to an annual 6.9 percent in January from 7.3 percent in December. With a report from Reuters