S&P sees

Bank expressed a similar view, saying that a peso under pressure from a potential double- deficit in the fiscal and current account balances would be prompts the central bank could not afford to ignore against the backdrop of rising inflation and domestic demand.

Thus, the BSP would have no choice but to adjust its policy tools, particularly its benchmark interest rates, the German bank said.

In its forecast released in January this year, Deutsche Bank said it saw the peso at P49.9:$1 by the the second quarter. By the end of the year, the Philippine currency could weaken further to

Philippine foreign reserves could moderate to $ 79.8 bil- lion, it said. A deterioration of the current account, which could result in a deficit of $ 1.4 billion in 2017 as oil prices and domestic demand soar, “could prompt the BSP to tolerate a weaker peso, as of course, dictated by the market.”

Above all, Deutsche Bank said a weak peso would tend to stoke inflation, which has already bottomed out before climbing to a two- year high of 2.6 percent in December.

- ing its uptrend in 2017 on the back of higher crude oil prices and a weaker peso,” it said, forecasting a from 1.8 percent in 2016.

Fitch-owned BMI Research also expects a likely tightening of monetary policy by the central bank before the end of 2017 as amid a more aggressive rate hike cycle in the United States.

Strong Philippine economic growth momentum will allow room for the BSP to prioritize macroeconomic stability over growth, BMI said.

“While we expect the BSP to maintain a neutral monetary 2017, we believe that the central bank will be forced to hike its benchmark RRP [ reverse repur it said in a report in December last year.

ANZ Research had also said the BSP would widen its interest rate corridor by the third quarter of to accelerate.

“We expect inflation to remain on an upward trend initially, pushed by annual gains in commodity- related items over the first half of the year. Meanwhile, robust domestic demand, coupled with the government’s push for infrastructure spending, will likely push inflation higher throughout 2017,” ANZ Research economist Eugenia Victorino said in a report nearly two weeks ago.

Liquidity conditions, which have started to normalize after the Christmas and New Year holidays, are an indication of the central bank’s increasing bias to tighten policy rates in the medium term, Victorino pointed out.

“In our view, this is indicative of the rising bias of the central bank to upwardly adjust its interest rates in the medium term. Hence, we maintain our expectations of

percent from 4 percent on May 16 in the runup to adopting an inter last year, the central bank has kept its key policy rate unchanged at its

The Monetary Board also held unchanged the corresponding rates for overnight lending and reserve requirement ratio was also kept steady at 20 percent.