Finance Secretary Ralph Recto yesterday said inflation is expected go down to 2.5 percent in September, or at least fall between the 2.1 percent and 2.9 percent range, an improvement from the 3.3 percent recorded in August.
Recto, who sits on the Bangko Sentral ng Pilipinas’ Monetary Board, also said the monetary authority can afford to slash interest rates further and match the size of the US Federal Reserve’s rate cut.
In a press briefing in Malacanang, Recto said inflation is on a downtrend but will go up anew in the fourth quarter as Christmas season nears.
He, however, expects inflation to remain within the 3.1 to 3.9 percent projection of the government.
He said government expects inflation to be between 2.9 and 3.1 percent by early 2025.
Recto credited the lower inflation print to the effect of some measures undertaken by the government, including the reduction of tariffs on rice.
He said more important than lowering the inflation rating is ensuring sufficient supply of rice and ham especially with the nearing Christmas season.
Recto expects the price of rice to go down further, consistent with the current price trend of the staple in Southeast Asia countries particularly in Thailand and Vietnam.
Rice was the top inflation driver, contributing 1.3 percentage points.
Slowing inflation allowed the BSP to cut its benchmark borrowing rate by 25 basis points to 6.25 percent in August, its first rate cut since November 2020, ahead of major central banks, including the Fed.
“The Fed reduced by 50 basis points. I think we can also do half a percent,” Recto a told media briefing.
Recto said amid the improved ratings, the government stands by its current fiscal targets including reducing the deficit to 3.8 percent and sustaining the current 6 percent to 6.1 percent growth rate to be sustained.
“(I’m) very confident we will achieve that this year,” he said, adding his confidence stems from the current economic performance of the country.
“I’ve seen the numbers, we are hitting our targets,” he added.
Recto said the government also remains committed to its goal of having a “straight A” or even an “A-“credit rating from all credit rating agencies by 2028.
BSP Governor Eli Remolona had earlier flagged there was room for one more interest rate cut this year. The BSP’s next meeting is on October 17.
