*
Feb inflation slows for the first time in 6 mths
*
C.bank prepared to adjust policy settings as needed
*
Economy sound despite high inflation - Finmin
*
C.bank may opt for 25 bps rate hike at March 23 meeting
(Adds finance secretary's comments in paragraphs 8-9)
By Neil Jerome Morales and Enrico Dela Cruz
MANILA, March 7 (Reuters) - Philippine annual inflation
eased for the first time in six months in February owing to
lower transport and food prices, but it is unlikely to budge the
central bank from tightening monetary policy further.
The consumer price index (CPI) rose at a slower pace of 8.6%
in February after accelerating non-stop since August, the
statistics agency said on Tuesday, but core inflation quickened
to 7.8% from 7.4% in January, suggesting price pressures remain.
With annual inflation still above the Bangko Sentral ng
Pilipinas' (BSP) 2% to 4% comfort range, an interest rate hike
at the central bank's March 23 meeting looks almost certain.
"The BSP remains prepared to adjust its monetary policy
settings as necessary to prevent inflation expectations from
becoming disanchored and safeguard the inflation target over the
policy horizon," it said in a statement.
But with the headline inflation rate slower than expected and month-on-month inflation at zero, ING economist Nicholas Mapa in a Tweet said the BSP would likely opt for a quarter-point hike rather than a 50 bps increase. Economists had forecast February inflation to quicken to 8.8%, while the central bank had 8.5% to 9.3% projection for February.
The BSP has raised rates eight times for a total of 400 basis points since last year bringing the overnight reverse repurchase facility rate to 6.0%, the highest since 2007.
Even at the level, interest rates in the Philippines remain "reasonable" in the face of soaring prices, Finance Secretary Benjamin Diokno, who sits on the central bank's seven-member policy-making monetary board, said in a media briefing.
Diokno added the economy remains sound despite high inflation which the monetary authority expected to return to within a target range by the fourth quarter of this year. (Reporting by Neil Jerome Morales and Enrico dela Cruz and Karen Lema; Editing by Martin Petty)
