THE PHILIPPINE central bank would probably increase key rates further this year to protect the peso amid a hawkish US Federal Reserve, analysts said at the weekend. READ
The local currency would continue its free fall against the dollar if the Bangko Sentral ng Pilipinas “lags too much” behind the Fed’s aggressive policy tightening, First Metro Investment Corp. and University of Asia and the Paci“We expect another 25-basis-point [increase] before the end of the year if inflation remains above 6.5%,” they said.
The Philippine central bank might raise policy rates by a total of 50 bps more at its November and December meetings, ANZ Research Chief Economist Sanjay Mathur and economist Debalika Sarkar said in a separate note last week. Makoto Tsuchiya, an assistant economist at Oxford Economics raised his inflation forecast last week to 5.6% this year from 5.4%.“Against a backdrop of ongoing elevated inflation and at least further 75-bp US rate hikes this year, we expect the BSP to raise rates by another 25 bps at its November meeting, bringing the policy rate to 4.5% at yearend,” he added.
The peso will probably continue to weaken against the dollar this week as the market expects a more aggressive policy tightening by the US Federal Reserve until yearend.The currency closed at P58.50 a dollar on Friday from P58.49 a day earlier, P1.07 weaker than a week ago, based on Bankers Association of the Philippines data.