BSP likely to raise rates, keep inflation in check
The central bank is likely to raise interest rates anew in the second half of 2019, First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said on Wednesday.
According to the August 2018 edition of “The Market Call,” FMIC and UA&P noted the Bangko Sentral ng Pilipinas (BSP) could go for another 25 basis points.
“BSP may still hike policy rates by another 25 bps in H2 to keep inflationary expectations in check and the peso-dollar rate more stable,” the report read.
The BSP has raised policy rates thrice so far this year — 25 basis points each in May and June, and another 50 basis points earlier this month.
The overnight borrowing rate is now at 4.00 percent, the overnight lending rate at 4.50 percent, and the overnight deposit rate at 3.50 percent.
The Philippine Statistics Authority (PSA) reported that inflation clocked in at 5.7 percent in July, the fastest in at least five years.
“While inflation may again rise faster in August given the recent heavy rains, but should peak that month due to easing of food (especially rice, due to September harvests and larger importations) and crude oil prices,” FMIC and UA&P said.
They said that inflation is likely to come in at 5.9 percent in August, 5.2 percent in September, and 5.0 percent in October.
The BSP has said that it is prepared to take the necessary steps to temper inflation.
“The BSP reiterates its strong commitment and readiness to take all necessary policy actions to address the threat of high inflation and deliver on its primary mandate of price stability,” BSP Governor Nestor Espenilla Jr. said. (GMA