Despite the sharp increases in the prices of basic consumer goods, the Bangko Sentral ng Pilipinas (BSP) is likely to maintain key interest rates at record-low levels to counter the economic fallout from the prolonged COVID-19 pandemic.
In a research note dated Sept. 7, economists from Japanese investment house Nomura said they expected the BSP to leave its key policy rate unchanged at 2 percent for the rest of the year and at least through the first half of 2022.
In a separate research note dated Sept. 7, JP Morgan economist Nur Raisah Rasid said that while inflation for the whole year would likely average higher than the BSP’s target range of 2-4 percent, the local monetary authority would likely “look past the overshooting” of the consumer price index (CPI) and “continue its current accommodative stance, in part due to concerns about domestic recovery.”
The country’s year-on-year inflation rate in August surged to a more than two-year high of 4.9 percent from 4 percent in July, mostly attributed to supply-side cost pressures, particularly on food items, especially with the onset of the rainy season.