Philippine inflation outlook very benign

The outlook for inflation in the Philippines is "very, very benign", but the central bank is conscious of risks from any build-up of excess liquidity, Deputy Governor Diwa Guinigundo said on Wednesday. Guinigundo said the inflation trajectory so far was "appropriate", and while the benign inflation outlook meant nominal appreciation of the peso was manageable, it was a becoming a problem for exporters.
"The inflation outlook continues to be very, very benign, and because of that nominal appreciation can be accommodated," he told Reuters. The Philippines reported on Tuesday its annual inflation rate rose to 4.4 percent in March, its highest in three months, largely due to increases in utilities and services, although the increase was within market and central bank expectations.
Central bank Governor Amando Tetangco said the data suggested monetary policy settings "remain appropriate". Guinigundo, who sits on the advisory committee that makes recommendations to the central bank's policy-setting board, said the central bank was keeping its options open on any interest rate rise as it was difficult to predict market conditions in one or two months. The benign inflation outlook meant nominal appreciation could be accommodated, he said, although the peso's rise was hurting exporters.