|
THE
government on Wednesday reported the tamest rise in
March consumer prices in 20 years, coming after a long
series of low inflation rates, yet an economist is
baffled why monetary authorities remain keen on keeping
key policy interest rates unchanged.
“They [Bangko
Sentral ng Pilipinas] should not be overly cautious and
let interest rates fall . . . that would foster greater
output and benefit those in the lending sector,” Victor
A. Abola of the University of Asia and the Pacific said
in a telephone interview.
Socioeconomic Planning Secretary Romulo L. Neri, in a
memorandum to President Arroyo, said a slowdown in the
annual price changes of all the major commodity groups
except for clothing last month contributed to a 2.2-
percent headline inflation.
Core
inflation rate also eased to 2.6 percent from 3.0
percent the previous month.
“An
ample supply of major food items such as meat, fish, and
fruits and vegetables contributed to the inflation
downtrend,” Neri, who is also director general of the
National Economic and Development Authority, said in an
agency release.
“I am a
bit surprised since BSP, which is supposedly doing
inflation targeting, remains cautious even despite
inflation rates way below their policy rates,” Abola
meanwhile commented.
The
Monetary Board in its previous meeting kept policy
interest rates steady, at 7.5 percent for the overnight
borrowing or reverse repurchase rate and 9.75 percent
for the overnight lending or repurchase rate. It also
maintained the tiering scheme on bank placements with
the BSP.
These
rates keep banks from channeling their funds to
otherwise more productive economic activities such as
the housing sector, Abola claimed.
Other
economists have described as a case of nervousness the
BSP’s reservations that excess liquidity, which comes
with lower rates, may threaten its 4 percent to 5
percent inflation target this year.
At best
inflation would be felt in financial asset prices but
not the consumer price index, they added.
“I think
the BSP should review its tiering system and lower
policy rates… which must be considered more for the
short term [period] rather than the long term,” Abola
said. |
