Mar 7, 2010
MANILA - THE Philippine central bank will not hike interest rates yet despite core inflation ticking up last month, and will focus on adjusting liquidity-boosting measures, a senior official said at the weekend.
Core inflation accelerated to 3.6 per cent in February from 3.0 per cent in the previous month, government data released on Friday showed, even as headline inflation eased to 4.2 per cent from 4.3 per cent as economists had forecast.
The increase in core consumer prices, which strip out some volatile food and fuel items, 'indicates that there is a potential buildup in demand pressure,' deputy central bank governor Diwa Guinigundo told reporters at the weekend.
'However, it doesn't mean the situation is getting out of hand.' 'There's no need to adjust the policy rate yet, just the liquidity enhancing measures,' he said.
The central bank began unwinding crisis-driven liquidity measures by raising the rate on a short-term lending facility at its policy meeting in January, in response to improving financial market conditions. Mr Guinigundo said he 'can't tell' whether more liquidity measures may be rolled back at the next policy meeting on Thursday.
The monetary authority is widely expected to keep the benchmark rate at a record low of 4 per cent until the second quarter of 2010 at the earliest to support a mending economy and as inflation remains tame. -- THOMSON REUTERS
