BSP expected to keep key rates steady until 2014

The Bangko Sentral ng Pilipinas (BSP) is expected to keep its benchmark interest rates on hold until late next year as the rate of rise in consumer prices is seen to remain stable, allowing policymakers to keep borrowing costs low.

But British financial giant Barclays plc on Friday warned that other monetary tools could be used to ensure that overheating in bank lending to certain sectors, particularly real estate, would not take place.

“With a favorable growth-inflation tradeoff, we expect the BSP to keep the policy rate unchanged until mid-2014,” the company said in a report.

Barclays’ comments come a day after the central bank kept its overnight borrowing and lending rates at record lows of 3.5 and 5.5 percent. In its report, Barclays also said yields for special deposit accounts are expected to stay at their current 2 percent across all maturities.

The BSP said inflation this year could average at a modest 3 percent. For 2014 and 2015, consumer prices are expected to go up by 4 percent and 3.4 percent, respectively.