Latest Stories

BSP seen keeping rates unchanged

Further cuts may hurt domestic economy


The Bangko Sentral ng Pilipinas is widely expected to keep policy rates unchanged on Thursday, Dec. 12, 2012, considering that further rate cuts may not be good for the domestic economy, the DBS Group said.

The Bangko Sentral ng Pilipinas is widely expected to keep policy rates unchanged on Thursday considering that further rate cuts may not be good for the domestic economy, according to the DBS Group.

Policy interest rates are up on the Monetary Board’s agenda in its meeting this afternoon.

DBS said in a new research note that in the immediate term, the central bank was less concerned about inflation than about the situation of capital inflows which—in the first place—was what prompted a 25-basis-point reduction in the monetary agency’s policy rates last October.

That most recent move brought the overnight borrowing rate to a record low of 3.5 percent and the overnight lending rate to 5.5 percent. Since the start of the year, monetary authorities have cut each rate by a total of 100 basis points.

“Further rate cuts may risk domestic macroeconomic stability further down the line,” DBS said. “With headline inflation still staying benign, BSP can keep rates accommodative, but further rate cuts appear unlikely.”

The Singapore-based group noted that the BSP has considered several new measures to help moderate capital inflows and temper the peso’s strength.

“These include curbs on NDFs (or non-deliverable forwards) and setting a minimum holding period for securities,” the bank said. NDFs are popular among investors seeking to mitigate possible losses on foreign currencies that are thinly traded or are not convertible to other currencies.

DBS said that no policy rate changes were also expected over the next four quarters.

The bank said that a rate increase of 25 basis points, instead of a reduction, could be seen in the fourth quarter of 2013. This is a revision of a previous forecast of such move in the third quarter next year.

DBS said that the series of policy rate cuts this year was possible because inflation stayed very low. Inflation figures have been easing progressively in the past few months, settling at 2.8 percent year on year in November. This put the January-November average to 3.2 percent, near the lower end of the central bank’s target range of 3 to 5 percent, data from the National Statistics Office showed.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Bangko Sentral ng Pilipinas , forecasts , Interest Rates , Philippines

  • mamer2

    Keeping the rates unchanged will just give more profits to these “Bully BANKS”…, that charges astronomical rates upon the banking public.
    Just note the enormous profits these Banks gain, year after year.
    Banks and Fuel-Oil Companies are giving the SMC (Beer) a run for the top-earner for the year.

  • Hayek_sa_Maynila

    “Further rate cuts may risk domestic macroeconomic stability further down the line” -DBS

    But it may actually be more dangerous if BSP does not cut…Who will stop PHL companies and local financial institutions from borrowing abroad where interest rates are extremely low and Central Banks are dropping cash from their helicopters while the BSP signals a one-way bet on the peso? This will lead to currency mismatched balance sheets again just like the 1980s and 1990s.

    Why is it that Singapore is limiting the movements of USD/SGD but DBS is telling us we should allow the peso to appreciate faster by encouraging the BSP not to cut rates despite their income per capita 20 times bigger than ours?….Carry trade! All they want is to make easy money from carry trade!

    All these foreigners telling us USD/PHP will go to 37 are not forecasting, they are talking up the peso so that they can get their free checks from the ever so obvious interest rate arbitrage…

    If we remain gullible and believe whatever we are told, we should not be surprised at all if the PHL returns to 1997 and suffer another lost decade while everybody else overtakes us or leaves us farther behind.

    We don’t mind if they forecast interest rates falling to 1.0% or the stock market rising to 7,000 but to make self-fulfilling forecasts on the peso is so insensitive to all Filipino workers, whether they work abroad or in the PHL.

    Uto Uto ang labas natin nyan pag nagkataon

  • Luthmar

    DBS states that “series of policy rate cuts this year was possible because inflation rate was
    very low.”  And that “inflation rate has been easing progressively…………”   Hello BSP, have you 
    people been to the markets, dept. stores ect. to shop?  Everything is so expensive.  How can you say that “inflation has been easing progressively.”  Inflation rate, for us consumers, have been rising progressively.   Please check your figures.

    • http://pulse.yahoo.com/_JEMNLLYAP5EA7SM3A6QUOGV62Q Chris

      Are you an economist?

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Slain officer’s ‘diagram’ rocks PNP
  • 2 contractors fined P25,000 for delays in Edsa rehab
  • Luisita beneficiaries take over renters
  • 5 years of hard work pay off for top UP grad
  • Art, music, book sale mark Earth Day at Arroceros park
  • Sports

  • Galedo caps ride of redemption
  • Beermen, Express dispute second semis slot today
  • Lady Agilas upset Lady Bulldogs in four sets
  • NLEX roars to 7th D-League win
  • Zaragosa, Park forge PH match play duel
  • Lifestyle

  • Summer Mayhem: The ultimate beach experience
  • A haven for steak lovers
  • Gongs and southern dances star in a workshop at San Francisco Bayanihan Center
  • This woman ate what?
  • Photos explore dynamics of youths’ sexual identity
  • Entertainment

  • Kristoffer Martin: from thug to gay teen
  • Has Ai Ai fallen deeply with ‘sireno?’
  • California court won’t review Jackson doctor case
  • Cris Villonco on play adapted from different medium
  • OMB exec’s assurance: We work 24/7
  • Business

  • Gaming stocks gain, PSEi eases on profit-taking
  • Cebu Pacific flew 3.74M passengers as of March
  • Corporate bonds sweeteners
  • Professionals in the family business
  • Foreign funds flowed out in Q1, says BSP
  • Technology

  • Vatican announces hashtag for April 27 canonizations
  • Enrile in Masters of the Universe, Lord of the Rings?
  • Top Traits of Digital Marketers
  • No truth to viral no-visa ‘chronicles’
  • ‘Unlimited’ Internet promos not really limitless; lawmakers call for probe
  • Opinion

  • Editorial Cartoon, April 25, 2014
  • No deal, Janet
  • Like making Al Capone a witness vs his gang
  • MERS-CoV and mothers
  • A graduation story
  • Global Nation

  • US4GG: Aquino should ask Obama for TPS approval, drone technology
  • Complex health care system for California’s elderly and poor explained
  • Tiff with HK over Luneta hostage fiasco finally over
  • DOLE sees more Filipinos hired by South Koreans
  • Filipinos second-shortest in Southeast Asia
  • Marketplace