No change seen in BSP rates

Economists expect the Bangko Sentral ng Pilipinas (BSP) to keep interest rates steady during the rate-setting meeting of the Monetary Board on March 22.

Joey Cuyegkeng, senior economist at ING Bank Manila, said the Dutch financial institution sees monetary authorities keeping benchmark rates unchanged despite the steady rise in inflation.

“We expect these price pressures to keep inflation elevated in the next six months. With BSP’s conviction and reit- eration, we now expect a steady monetary policy decision at the March 22 policy rate meeting,” he said.

Inflation leapt to its highest level for more than three years to 4.5 percent in February from four percent in January. This was the highest inflation rate since

hitting 4.9 percent in September 2014.

The uptick in inflation was primarily traced to higher oil prices and electricity rates, as well as the impact of the new tax reform law.

“Tax reform related impact together with higher oil prices, power rates and food prices accounted for the acceleration in inflation last month,” Cuyegkeng said.

Capital Economics economist Gareth Leather said the think tank is sticking to its view that the BSP would leave interest rates on hold this year.

ANZ economist for Asia Shashank Mendiratta said they are now revisiting their projected 25-basis point rate hike on March 22.

“Despite the inflation readings, statements from central bank officials suggest a reluctance to tighten. We are accordingly, revisiting our call for a 25 basis point rate hike in March,” the economist said.