Inflation expected to remain within 2010, 2011 target ranges

ECONOMISTS expect 2010 and 2011 inflation to fall within official target ranges, a poll conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

The September survey of eight economists led to a mean forecast of 4% for 2010, down from 4.5% in the previous quarter. For 2011, the mean forecast was 4.1%, down from 4.8%.

The average outlook for 2012 was 4.5%, lower than the 5.3% in the last quarter.

The BSP’s inflation target ranges for 2010 and 2011 are 3.5-5.5% and 3.0-5.0%, respectively.

The poll of economists from Asia ING, ATR KimEng Financial Corp., Deutsche Bank, HSBC, IDEA, Metropolitan Bank & Trust Co., think tank PEP and Rizal Commercial Banking Corp. was included in the central bank’s third quarter inflation report released on Friday.

Respondents said a fragile economic recovery as well as a strong peso would temper inflationary pressures. The onset of the La Niña weather pattern, however, could lead to higher agricultural prices.

Inflation in September was at 3.5%, slower than the 4% recorded in August.

October results are scheduled to be released this Friday and the central bank has offered a 2.6-3.5% outlook.

Asked how the poll would affect central bank policy rates, BSP Deputy Governor Diwa C. Guinigundo said it showed that inflation expectations were well anchored.

“[There is] no compelling reason to raise interest rates assuming [the] inflation outlook remains unfavorable and growth is respectably robust,” he said in a text message. –Businessworld