BSP sees inflation within target range

MANILA, Philippines – Inflation is seen remaining within the three to five percent target despite the jeepney fare adjustments set to take effect on June 14, the Bangko Sentral ng Pilipinas said.

BSP Governor Amando M. Tetangco Jr. said in an e-mail the fare adjustments for jeepney and even for trains in the Metro were already taken into consideration when the central bank made its recent inflation forecasts.

“The baseline inflation projections of the BSP already incorporate adjustments in jeepney fares, as well as MRT and LRT fares,” Tetangco pointed out.

The Land Transportation Franchising and Regulatory Board (LTFRB) in the last week of May approved a 50-centavo fare increase and a 10-centavo hike for succeeding kilometers for public utility jeepneys in the National Capital Region, and in Regions 3 and 4.

The decision follows a rise in fuel cost seen earlier this year. The fare adjustment takes effect on June 14.

“The (inflation) projections continue to show within target inflation within the policy horizon,” Tetangco said.

Inflation has so far averaged 4.1 percent in the five months to May, above the midpoint of the BSP’s three to five percent target range.

The central bank last May 8 forecast the rate to average 4.3 percent this year, slightly above its March 27 projection of 4.2 percent. The hike came amid higher food prices, and pending adjustments in transportation fares and power rates.

Tetangco said “The projections will be reviewed in the next policy meeting.”

Monetary authorities have kept key rates steady during its first three policy meetings for the year, amid expectations inflation would remain within target and strong economic growth would continue. A total of two-percent increase in the banks’ reserve requirements, however, was implemented to mop up excess liquidity in the system.

Overnight borrowing and overnight lending rates have been maintained at 3.5 percent and 5.5 percent, respectively, since October 2012.

The next rate-setting meeting has been slated for June 19. –Kathleen A. Martin (The Philippine Star)