The Bangko Sentral ng Pilipinas is likely to keep interest rates steady next week as inflation surprised on the downside at 4.9 percent in October, but foreign banks economists warned that risks of another rate hike remains
Nalin Chutchotitham, economist for the Philippines at Citi, said the BSP’s Monetary Board is likely to stand pat during the rate-setting meeting scheduled on Nov. 16 after delivering a 25-basis-point off-cycle hike last Oct. 26.MANILA, Philippines — The Bangko Sentral ng Pilipinas is likely to keep interest rates steady next week as inflation surprised on the downside at 4.9 percent in October, but foreign banks economists warned that risks of another rate hike remains.
Despite easing in October after quickening for two straight months to 5.3 percent in August and 6.1 percent in September from a year low of 4.7 percent in July, the growth in the consumer price index averaged 5.4 percent during the 10-month period and stayed above the central bank’s two to four percent target range.
DBS Bank senior economist Radhika Rao said there is less urgency for the central bank to deliver another rate hike this month due to the slower rise in the prices of essential goods and services last month. The BSP has emerged as the most aggressive central bank in the region, raising key policy rates by 450 basis points despite a hawkish pause in four straight-rate setting meetings in May, June, August, and September this year.
The British banking giant sees inflation softening throughout 2023, but it could flare up again in first half of next year once tariff rates increase due to the expiration of Executive Order 10, which temporarily lowered the import duties on certain food products. Nomura sees inflation accelerating to 6.2 percent this year from 5.8 percent last year before easing to 3.8 percent next year.
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