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Actual: 2.2% (0.14% m/m sa)
Consensus forecast: 2.4%
April inflation came in slightly weaker than expected, at 2.2% y/y, hitting a 20 month low. Headline inflation fell marginally amid ongoing softness in food prices (cereals, dairy and cooking oil), but the main weakness was from lower core CPI, which was driven by down by housing utility and misc services inflation.
Inflation expected to stay broadly within the BSP's 2-4% target range this year, with weaker food and energy inflation offset by firm core inflation.
After the data release, BSP governor Tetangco reiterated that the current policy stance was "appropriate" and that the outlook for inflation remains manageable.
He also noted that the BSP is mindful of the Fed's policy action, but he had earlier said that the bank does not necessarily need to move 'in sync', and that it will allow market movements to play out as long as they are not excessively volatile.
Overall, the BSP remains comfortable with its policy stance. Although low inflation provides room to keep policy on hold, growth remains robust, making it unlikely that the BSP will join other central banks in the region in easing policy in its next meeting on 14 May.
"The Philippines remains a significant beneficiary of lower oil prices, and we forecast growth of 6.5% in 2015, while the central bank is forecasting even stronger growth of 7-8%", says Barclays.
