The Philippine economy’s first-quarter growth of 4.9 percent year on year points to a gradual tightening of monetary policy, with overnight borrowing rising to 5 percent by the end of the year, according to UBS Securities.
The Switzerland-based investment research firm said in a research note that the continued economic growth could also support a strong peso.
“We continue to expect 50 basis points of policy rate increases in two 25-basis point steps over the next six months, taking rates to 5 percent,” said Edward Teather, a UBS economist.
A continually growing domestic economy “will leave monetary policy settings fairly easy but could give some support to the currency as the Bangko Sentral ng Pilipinas’ rate hikes have lagged those elsewhere in the region as a result of hitherto benign inflation pressures,” Teather said.