BSP seen keeping policy rate unchanged

Bangko Sentral ng Pilipinas. (File photo / Philippine Daily Inquirer)

The Bangko Sentral ng Pilipinas (BSP) is expected to keep its key policy rate at a historic low when the Monetary Board meets on Thursday, despite headwinds getting stronger.

UK-based research firm Capital Economics said the BSP’s overnight borrowing rate was likely to remain at 2 percent throughout this year as the regulator continues to prioritize support for economic recovery.

“We expect inflation to rise over the coming months, but probably not by enough to worry the central bank,” the research firm said.

Capital Economics observed that while inflation remained at 3 percent year-on-year in February, this was likely to heat up over the coming months amid steep rises in global commodity prices.

Still, the rise in inflation is likely temporary and is expected to drop back to within the BSP’s target range of 2 to 4 percent.

“The bigger concern for the authorities is the weakness of the recovery,” it said. INQ