The Philippine central bank might pause after reducing the benchmark interest rate at both of its meetings so far this year as elevated oil prices threaten to spur inflation, bank Governor Amando Tetangco said.
“Pausing gives us time to digest and monitor the impact of past policy actions and to consider other relevant data,” Tetangco said in an e-mailed reply to questions on Saturday. “A pause is always on the table, as are other policy moves.”
Bangko Sentral ng Pilipinas cut interest rates by a quarter-percentage point at each of its past two policy meetings, taking the overnight borrowing rate to 4 percent, the lowest level in a year.
Crude oil prices have gained more than 8 percent so far this year, a jump that risks spurring price pressures in a nation that imports almost all its requirements, even as inflation cooled to its slowest pace in more than two years last month.
“Second-round effects cannot be ruled out, especially if price hikes are persistent, so we are watching the situation carefully,” Tetangco said.
The Philippine Land Transportation Franchising and Regulatory Board might decide on a 0.50 (US$0.01) peso increase in minimum transportation fares this week, board Chairman Jaime Jacob said in a mobile phone message yesterday. The minimum fare in jeepneys, a common form of Philippine public transport, is currently 8 pesos.
While the central bank included a “modest” fare adjustment on its within-target inflation forecast this year, any “pass through” impact of oil prices tends to be significant, Tetangco said. The next policy meeting will be on April 19.
Consumer prices rose 2.7 percent from a year earlier last month, the slowest pace since September 2009. Oil for delivery next month climbed to US$107.40 a barrel on the New York Mercantile Exchange on Friday.
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