HONG KONG (Dow Jones) - Supportive monetary policy can boost domestic demand and confidence in the economy, Bangko Sentral ng Pilipinas Governor Amando Tetangco said, noting the global economy seems to be tipping towards a further slowdown.
In written responses to questions from Dow Jones Newswires, Tetangco said average annual inflation rates in the Philippines were likely to fall within the lower half of the Bangko Sentral ng Pilipinas' 3%-5% target range through the end of 2013.
However, he noted there were also upside risks to inflation, in particular linked to sustained capital inflows and volatility in global oil prices.
The National Statistics Office disclosed yesterday that inflation decelerated to 13 month low of 3.9 percent in January compared to 4.2 percent the month before
"Amidst continued uncertainty in the global economic environment, the Philippine economy is likely to face external headwinds in 2012," Tetangco said.
"While the strength of domestic spending can help offset the weaknesses in external demand, a supportive monetary policy stance can help sustain domestic demand and bolster confidence in the economy."
The comments from Tetangco may indicate he is inclining towards additional monetary easing.
In January, the Philippine central bank cut its overnight rate by 25 basis points to 4. …