Rates seen to stay unchanged
Monetary authorities may keep interest rates steady for the foreseeable future, with the economy growing at a healthy pace amid stable consumer prices, banks said this week.
Standard Chartered economist Jeff Ng yesterday said in a briefing that current policy settings might stay put until the end of next year.
The Philippines is expected to continue outperforming not just most of its neighbors in Southeast Asia but also most other emerging markets in the world. Meanwhile, inflation is expected to remain steady.
“Growth has been defensive and strong. During the 2009 financial crisis, Philippine economic growth slowed to around 1 percent, but we’re not in that situation anymore,” Ng told reporters.
“That means over the past five years, the economy has become stronger,” he said.
In 2015, Standard Chartered expects the Philippine economy to grow by 5.7 percent, implying an acceleration in the second half of the year after the first semester’s disappointing 5.3 percent.
Metropolitan Bank & Trust Co., in a report, said it expected the country’s full-year growth to reach 6 percent on the back of higher government spending. Early campaigning ahead of next year’s polls would also provide a boost to output, the bank said.
Domestic consumption will continue to play the main role in the country’s economic story, with consumer spending behind two-thirds of gross domestic product.
Ng said investments from both the private and public sectors were also expected to rise, driving stronger growth. He said a resurgence in government spending would be welcome, but even if the state would fail to meet disbursement targets, the rest of the economy would remain stable.
Amid these conditions, the Bangko Sentral ng Pilipinas (BSP) is expected to keep current policy settings steady.
The British bank said it expected the BSP’s overnight borrowing and lending rates to stay at 4 and 6 percent, respectively, until the end of next year.
Even with the economy growing at a pace faster than its neighbors, inflation is seen staying low. This year, Standard Chartered expects inflation to average 1.5 percent, while Metrobank sees an average of 1.7 percent.
Both projections are below the BSP’s target range of 2 to 4 percent. Monetary policies set by the BSP help protect consumers’ purchasing power by keeping prices stable.
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