Bangko Sentral seen keeping rates unchanged
MANILA, Philippines–The central bank will likely keep interest rates on hold this week, going against the region’s grain as one of the few to stay its hand as others ease settings to boost economic growth.
Analysts polled by the Inquirer were unanimous in calling that the Bangko Sentral ng Pilipinas (BSP) would leave its key policy rates unchanged at its policy meeting on Thursday.
“BSP will wait for more data to change its monetary stance,” HSBC said in a note to clients this month.
Analysts from HSBC, four other banks and think tank Capital Economics said policy rates would be kept steady this week. This comes amid low and steady inflation and good growth prospects for the real economy.
The BSP’s benchmark overnight borrowing and lending rates currently stand at 4 and 6 percent, respectively. Both are near their record lows.
Since the start of the year, central banks in the region have been on an easing spree as policymakers try to boost domestic demand amid low inflation. Central banks in South Korea, Thailand, Indonesia and Japan, among others, have all adopted more accommodative stances.
“Our most recent assessment of the policy stance suggests that current policy settings remain appropriate,” BSP Governor Amando M. Tetangco Jr. said earlier this month.
The BSP’s main goal is to protect consumers’ purchasing power by keeping prices stable. This is done through adjustments in interest rates, which influence the cost of money for banks and their clients. Monetary authorities also manage the amount of cash circulating in the economy.
Last February, inflation inched up to 2.5 percent from January’s 2.4 percent. Despite the acceleration, the rise in consumer prices still remains well below last year’s average of 4.1 percent.
This year, the BSP expects to keep inflation within the target range of 2 to 4 percent, thanks partly to cheaper fuel offsetting power rate increases and rising food costs.
“Inflation could fall well below the lower inflation bound … in the third quarter and this could provide room for the BSP to ease [policy settings],” JP Morgan said in a separate note.
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.