Philippine Central Bank may tweak policy settings

MANILA, Philippines (Xinhua) - The Philippine Central Bank said today it may slightly adjust its policy if necessary following the 6.9 percent economic growth during the last quarter of 2014.

Central Bank Governor Amando M. Tentangco Jr. said that the agency will reset the projected forecast "to assess if there's any change in the balance of risks to inflation," as well as to formulate adjustments to policy stance.

Based on the assessment by the National Economic Development Authority (NEDA), the inflation rate averaged at 4.1 percent last year is well-within the three to four percent target for 2014.

Tetangco said that their forecast rate averaging at 3 percent this year and 2.6 percent in 2016, are also both within the 2 to 4 percent goals for both years.

"We will refresh our forecasts to include this new development, oil price expectations, shifts in interest differentials and global investment sentiment," said Tetangco.

The Philippine economy jumped to a much higher notch during the last quarter of 2014, with 6.9 percent economic growth after recovering from a disappointing 5.3 percent expansion in the third quarter though it was still quite short to the Aquino Administration's target which is between 6.5 to 7.5 percent.

Though it slightly failed to reach its target last year, the country's economic growth was the second fastest in Asia in 2014 following China's 7.4 percent.

"The rebound in Q4 GDP, which puts full year growth at 6.1 percent reflects yet again the underlying strength of domestic aggregate demand," Tetangco explained.

Government officials and other economic advisers are hopeful that domestic economic growth could settle within 7 to 8 percent this year.

Monetary authorities in December held key policy rates steady as inflation expectations fell within the target ranges until 2016.

The overnight borrowing and overnight lending rates were previously hiked by a total of 50 basis points in the third quarter of last year to anchor inflation expectations.

The Central Bank's monetary board will review its policy settings on Feb. 12.