Inflation seen resuming downward trend in June: poll

Reuters

Posted at Jul 03 2019 03:09 PM

MANILA - Philippine annual inflation likely resumed its downward trend in June after a slight uptick the previous month due to lower rice and fuel prices and a stronger peso, a Reuters poll showed.

The median forecast in a poll of 10 economists was for inflation to have slowed to 2.9 percent in June, which would mark the first time it has eased below the midpoint of the central bank's 2-4 percent target since December 2017. Inflation was 3.2 percent in May. 

Inflation has been running within the central bank's target band since February and policymakers expect it to be around the bottom end of that range in the current quarter.

Slowing inflation has allowed the central bank to start reversing last year's rate hikes, which totaled 175 basis points, with a quarter-point cut in its benchmark interest rate in May.

The central bank expects inflation to average 2.7 percent this year and 3.0 percent next year, well inside its 2-4 percent target for both years.

The central bank kept the policy rate steady at 4.5 percent last month but left the door open to further policy easing to guard against rising economic risks from a heated Sino-US trade war and slowing global growth. It will next meet on Aug. 20.

Some economists expect two more 25-basis points rate cuts this year.