BSP gov says inflation pressures eased

Reuters

Posted at Jul 12 2011 05:00 PM | Updated as of Jul 13 2011 01:01 AM

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) said on Tuesday inflation pressures have eased but it was monitoring price developments and liquidity expansion to ensure risk perceptions do not change and economic growth is not disrupted.

"The BSP is closely monitoring price developments. While pressures have somewhat eased, inflation expectations have leveled off, there are price uncertainties, and therefore we need to closely monitor," BSP governor Amando Tetangco told Reuters in an interview.

Last month, the central bank held interest rates steady at a policy review, pausing after raising them at its two previous reviews. But it raised bank reserves requirements, saying it wanted to make sure liquidity in the banking system was not excessive.

"So far, we have been quite successful in containing the growth of domestic liquidity," Tetangco said, adding the central bank had pre-emptively raised reserve requirements to head off the risk that liquidity could create inflation pressures.

Tetangco said the central bank expects average inflation in 2011 to be near the upper end of the target band, and below the midpoint of the target range in 2012, based the old series using 2000 prices.

BSP deputy governor Diwa Guinigundo said inflation may peak at between 5% and 6% in the September quarter.