The Bangko Sentral ng Pilipinas (BSP) will likely leave its key interest rate unchanged when its policy-making Monetary Board meets on Thursday amid a benign inflation environment and an economy that needs to make up for a weak first-quarter performance.
In a research note, the Manila unit of Dutch financial giant ING Bank said the BSP would also be heavily influenced by the latest meeting of the US central bank, whose Federal Open Market Committee (FOMC) would announce its own interest rate decision on June 19 (early June 20, Manila time).
“Despite dovish comments from select FOMC members, the markets are not expecting the Fed to cut rates at the close of its meeting,” ING Manila senior economist Nicholas Mapa said. “Barring any surprise cut the Fed, we do not expect any fireworks from BSP at its policy meeting tomorrow.”
Along with the Indonesian central bank, which will also announce its key interest rate policy on Thursday, Mapa said the BSP was expected to “enact a ‘dovish pause’ by keeping the policy stance neutral but simultaneously signaling the increased likelihood for easing in the near term depending on prevailing conditions.”
At present, the BSP’s overnight borrowing rate—which banks use as a basis for their own borrowing and lending rates to clients—stands at 4.5 percent after a 25-basis point reduction last month in the face of slowing inflation.