The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, anticipated on Friday that the country's October inflation rate would continue to drop, ranging between 2.9 percent and 3.8 percent.

BSP Governor Amando M. Tetangco Jr. said the declining prices of food and oil would offset the impact of the strengthening peso which has appreciated about 6 percent this year.

According to Tetangco, the moderation in prices reflects a downtrend in inflation as the country's supply of major food groups remains sufficient to meet demand. Besides, the price of Dubai crude oil, a key import, declined as well.

"These, together with the peso appreciation, could have offset increases in the domestic prices of premium and regular kerosene and electricity charges, to cause an overall slower inflation for the month," Tetangco said.

Headline inflation has moderated from 3.8 percent in August to 3.6 percent in September, according to the National Statistical Office.

Tetangco said the forecast was consistent with expectation of benign inflation over the next 18 to 24 months when low interest rates were to prevail.

Just a day earlier, the BSP reduced the key policy interest rates by 25 basis points. The decision was designed to encourage still more investment activities and for the banks to lend more, Tetangco said.