MANILA (UPDATE) — Inflation cooled further in August to its slowest in nearly three years, official data released Thursday showed, giving the central bank room for further policy easing.

The consumer price index rose 1.7 percent in August from 2.4 percent in July. The median forecast of economists in a Bloomberg poll was 1.8 percent. It was also the first time in 3 years that inflation was below government's target.

The August inflation figure is a "positive development" which the Monetary Board will "take note of" when it meets on Sept. 26, said BSP Governor Benjamin Diokno.

The BSP cut the benchmark lending rate by 25 basis points on Aug. 8 as inflation slowed and as economic growth slowed to a 4-year low in the April to June period due to the delayed passage of the 2019 budget.

Diokno said he was “confident” that average inflation would settle just near 2 percent in the third quarter before accelerating slightly during the last 3 months of the year.

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With cooling inflation, the situation is "ripe" for another interest rate cut, ING Bank Philippines senior economist Nicholas Mapa told ANC

While the slowdown is anticipated, inflation has room to cool further, Standard Chartered Asia economist Chidu Narayanan said in a separate ANC interview.

The BSP slashed the overnight borrowing rate by a total of 50 basis points so far this year and some analysts said another cut could be forthcoming before the end of the year.

Diokno also earlier signaled further reductions in the reserve requirement ratio for banks to increase liquidity.

Gross domestic product may grow to 6.2 to 6.4 percent for the rest of the year, driven by policy easing, government spending and “healthy” consumption, Mapa said.

President Rodrigo Duterte's economic managers had put in place several measures to tame inflation, which peaked at near 10-year highs last year. This included replacing import quotas on rice with tariffs.

Malacañang on Thursday assured the public that the Duterte administration would “work double time” to address socioeconomic concerns.

“We assure our people that our success in taming inflation will not lull us into complacency,” Presidential Spokesman Salvador Panelo said.