MANILA -- The Bangko Sentral ng Pilipinas said on Tuesday it might be too early to talk about easing monetary policy even as the headline inflation returned to its comfort range in February.
Annual inflation eased to a one-year low of 3.8 percent last month due to slower gains in food, fuel and utility prices, bringing the average inflation in the first two months to 4.1 percent.
"It may be premature to talk about a possible reduction in either the policy rate of the RRR (reserve requirement ratio) at this time considering that the year-to-date inflation remains above the target of 2-4 percent," central bank Deputy Governor Diwa Guinigundo told reporters.
Economists expect the central bank to unwind some of last year's tightening, with some saying it could start doing so as early as its meeting on March 21 given the improving inflation outlook.
February's inflation print was lower than the 4.0 percent economists had expected. January inflation was 4.4 percent, staying outside the central bank's target range since March last year.
ING economist Nicholas Mapa said the central bank under newly appointed Governor Benjamin Diokno could "think about easing off the brakes and look to help support the growth side of the equation."
The Philippine peso weakened 0.6 percent to 52.04 against the US dollar after the data was released, while the stock market index rose as much as 0.8 percent.
The Philippine central bank has said inflation will return to its comfort range this year, with fuel prices expected to ease further and as the government starts to lift caps on rice imports.