Bangko Sentral hikes inflation forecast, sees faster growth

The Bangko Sentral ng Pilipinas has raised its inflation forecast for this year on account of the faster rise in consumer prices at the start of the year, and also sees faster growth this quarter. "Inflation forecast is 3.3 percent for 2013 and 3.3 percent for 2014," said Bangko Sentral assistant governor Cyd Tuano-Amador. This is higher than the earlier forecast by the central bank of 3.0 percent for 2013 and 3.2 percent for 2014. Still, the new projection remains well within the Bangko Sentral's 3 to 5 percent inflation target for both years. "The main driver behind the main 2013 forecast is higher actual outturn for January inflation," said Amador. Inflation picked up to 3 percent in January. Moreover, Amador said the Bangko Sentral has incorporated petitions for electricity, wage and fare increases into their new baseline forecast. Sought for comment, Metropolitan Bank & Trust Co. research head Ildemarc Bautista said, "Inflationary risks remain on the upside due to strengthening economy and election spending. There is upward pressure on prices particularly next year." Metrobank sees inflation settling at 3.6 percent this year. As such, Bautista said, monetary authorities may hike policy rates by the last quarter. Policy rates were kept at record lows of 3.5 percent for overnight borrowing and 5.5 percent for overnight lending. Monetary authorities vowed to remain on their toes in ensuring that policy settings remain favorable to manage inflation. "Going forward, the BSP will continue to monitor emerging price and output conditions to maintain the consistency of the monetary policy stance with the price stability objective while being supportive of economic growth," Bangko Sentral Governor Amando Tetangco said. Amador also said that BSP sees faster growth than the trend for this quarter. "The BSP's leading and coincidental indicators point that we are still at expansion pace," she said, adding that growth "will definitely be higher than the trend growth of 4.7 percent for the past ten years." — BM, GMA News