BSP: Inflation risks in PH lower than rest of Asia

The monetary policy is still “appropriate” as inflation this year and next remains within the target range, Bangko Sentral Governor Amando Tetangco said.

“We still believe that the stance of monetary policy continues to be appropriate,” Tetangco told reporters. “Our forecast show that it is going to be well within the inflation target for this year and next year,” he told reporters Tuesday. Some increases in transport fares, toll and rice prices are included in the current projection, he said.

Asian policy makers are battling inflation because of rising food and oil costs. This has prompted some central banks to resume raising borrowing costs after keeping interest rates low to support their economies. Bangko Sentral last month kept its benchmark interest rate at a record-low 4 percent for the 13th meeting.

India’s central bank on Tuesday raised its rate to a two-year high and signaled further increases as it moved up its inflation forecast. South Korean President Lee Myung Bak has declared “war” on inflation, with the government announcing price controls and the central bank this month raising rates for the third time since the financial crisis.

Inflation risks in the Philippines are lower than elsewhere in Asia, Tetangco said. Policy makers in December forecast inflation to average 3.6 percent this year compared to the bank’s 3-percent to 5-percent target.

“The other economies, they have seen an acceleration in inflation,” the governor said. “In our case inflation has remained manageable. We are in different situations.”

The Philippine economy probably expanded 6.2 percent to 7.2 percent in the fourth quarter, compared with a 6.5-percent gain in the previous three months, Economic Planning Secretary Cayetano Paderanga said. Full-year growth probably ranged from 7 percent to 7.4 percent, he said, beating the government’s 5-percent to 6- percent goal in 2010.

The government is keeping a plan to boost growth to 7 percent to 8 percent this year, saying it’s too early to revise it.

“I don’t think it’s an easy target,” President Benigno Aquino’s spokesman Ricky Carandang told reporters. “I think it’s a fighting target. You have to be ambitious here.” Bloomberg