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Update on Thrift Banks' NPLs


“The year-on-year inflation rate in February rose  slightly to 3.0 percent from 2.6 percent in January, bringing the average during the first two months of the year to 2.8 percent, lower than its 6.0-7.0 percent inflation target range for 2000.  The BSP is pleased to note that the February inflation rate  is exactly on track with the BSP’s internal projection of 3.0 percent for the month.”

“The slightly higher February inflation rate was on account of the  increase in fuel, light, and water (FLW) of 9.0 percent from 8.4 percent in January.  This increase was tempered partly by the decline in prices of all the other commodity groups.  The inflation rate of food, beverages and tobacco (FBT) continued to decelerate to negative 0.2 percent from negative 1.0 percent in January; clothing to 2.4 percent from 2.7 percent; housing and repairs (H&R) to 6.7 percent from 7.2 percent; services to 11.4 percent from 11.5 percent; and miscellaneous items to negative 0.4 percent from negative 0.3 percent.”

“Meanwhile, the month-on-month inflation rate in February slowed down to 0.3 percent from 0.5 percent in the previous month.  In particular,  FBT inflation rate (which accounts for more than half of the CPI weights) dropped to 0.3 percent from 0.9 percent in January.  H&R also fell to 0.5 percent from 0.6 percent in January.  These declines more than dampened the increases in prices in the FLW, services and miscellaneous groups.” 

“The inflation rate in February continues to be significantly lower compared to the government’s inflation objective, providing the monetary authorities with enough flexibility in monetary management.   Despite the sustained good inflation performance, the BSP will remain cautious to keep price movements within target and consistent with a broadly stable exchange rate, but with enough flexibility to foster an environment supportive of economic growth.  The recent move of the BSP to scrap the two-tier overnight rate scheme is reflective of this policy thrust of the monetary authorities.  This is essential in ensuring higher and sustainable economic growth.”

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