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August 11, 2008

Philippines’ central bank sees measures bear fruit
The Philippines’ central bank said its monetary measures to fight against inflation starting to yield positive results, reported Reuters on Sunday.

Reuters quoted the central bank’s governor Amando Tetangco as saying that the country’s inflation was on a deceleration due to the tightening measures which have been implemented

during the past two months, reported Reuters.

Philippines’ annual inflation in July rose near a 17-year high of 12.2 percent due to climbing food prices but the uptick in the rate from June’s annual level of 11.4 percent was less than the

1-2 percentage point increases seen in previous months.

Core inflation, which strips out volatile food and energy costs, was 6.3 percent from a year earlier compared to 6.6 percent in June, its first let-up in pace since November.

“The rate of increase even on the headline rate is decelerating. While the rate itself is increasing, the pace of increase is moderating,” Tetangco said.

On the braking in core inflation, he said: “I think that’s a good sign but there’s still risk because sometimes this could be volatile. We have to see if such a trend has been established.”

The central bank has hiked rates by 75 basis points since June and many analysts expect a third straight rate increase when the monetary authority’s rate-setting board meets on Aug. 28.

The July annual inflation data still eclipsed earlier central bank projections that inflation would peak at slightly above 12 percent in the late third quarter or early fourth quarter.

The central bank has revised its average inflation forecasts for 2008 and 2009 in two policy meetings in a row to July. It currently expects inflation to average 9 to 11 percent this year, and

6 to 8 percent in 2009, up from 2.8 percent last year.

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