MANILA (Reuters) - Philippine annual inflation likely slowed further in September due to base effects and lower rice prices, a Reuters poll showed, leaving the door open for more interest rate cuts to bolster a weakening economy.
The median estimate for September inflation stood at 1.1%, the poll showed, which would be the lowest in more than three years and within the central bank’s 0.6%-1.4% forecast for the month.
If the projection proves to be correct, it would be the second straight month that inflation has come in below the bottom end of the central bank’s 2%-4% target for the year.
Inflation peaked at a near-decade high of 6.7% in September and October last year, providing a high base. Overall prices have since eased, allowing the central bank to start reversing some of last year’s 175 basis point interest rate hikes.
On Thursday, the central bank slashed its benchmark interest rate PHCBIR=ECI for a third time this year to support a slowing economy. The following day it reduced banks’ reserve requirement ratio by 100 basis points to boost credit growth.
“We believe that the BSP has come to the end of its easing cycle for the year unless risks to growth necessitate further easing,” Robert Dan Roces, an economist at Security Bank in Manila, has said in a note.
“The BSP still has significant policy leeway that it could choose to use to push for growth in 2020.”
The central bank has two more policy meetings before the year ends.
Reporting by Karen Lema; Editing by Subhranshu Sahu