BSP Governor Rafael B. Buenaventura was pleased to note that the inflation in September fell further to 6.1percent following a decline to 6.3 percent in August. The deceleration in September was traced to the continued softening of prices of food items and energy-related products as well as the price decline in other major commodity groups.
With the year-to-date average inflation rate now at 6.6 percent, the Governor said that this would further strengthen expectations that the 6.0-7.0 percent target for 2001 will be achieved.
With the expected slowdown in inflation and relatively subdued inflationary pressures in the near term, the Monetary Board reduced the BSP’s policy interest rates by 25 basis points as a growth-supporting move in the face of a weak external environment—owing to the US economic downturn and other global uncertainties. The rate reduction was also intended to allow the economy to build on its internally-generated growth performance in the first half of the year.
The Governor noted that the prevailing favorable conditions in food prices, oil prices and the foreign exchange market should provide a stabilizing influence on consumer prices and create a benign path for headline inflation. He emphasized, however, that the risks to price stability remain present and monetary authorities will continue to monitor domestic and external developments in order to come up with timely and appropriate policy responses.