Despite rising food and fuel prices in January, the Philippine bond market is anticipated to remain resilient. Inflation remains within the target range, but potential risks and the need for capital formation to support growth are emphasized.
The Philippine bond market is expected to remain strong despite inflationary pressures caused by rising food and fuel prices in January, according to Manulife Investment Management and Trust Corp. Jean Olivia de Castro, Head of Fixed Income at MIM, stated in a commentary on Thursday that barring unforeseen events, inflation is not anticipated to pose a significant threat to the local bond market.
This assessment follows the Philippine Statistics Authority's (PSA) report on Wednesday revealing that inflation remained at 2.9 percent in January 2025, mirroring the previous month's rate but surpassing the 2.8 percent recorded in January 2024. De Castro attributed the increase in food costs to the lingering impact of typhoons from the fourth quarter, which negatively affected agricultural output. She also noted that three consecutive oil price hikes in January likely sustained upward pressure on oil inflation, despite a partial rollback towards the month's end. The current inflation rate falls within the Bangko Sentral ng Pilipinas' (BSP) target range of 2 percent to 4 percent for 2025. However, de Castro emphasized the importance of closely monitoring potential risks, such as local weather disturbances and geopolitical tensions. Meanwhile, the Philippine government is prioritizing strengthening capital formation to support economic growth. Despite the economy recording a 5.6 percent growth in 2024, falling short of the 6 to 6.5 percent target, capital formation is crucial for achieving at least the lower end of the 6 to 8 percent growth target set for 2025. De Castro explained that bolstering capital formation would enhance the country's productive capacity, generate employment opportunities, and ensure long-term economic resilience. Furthermore, economic growth is anticipated to be supported by the delayed effects of the BSP's reduction of key policy rates, which amounted to a total of 75 basis points (bps) cut. Additional rate cuts are projected for this year. De Castro stated that by fostering a favorable investment environment and maintaining prudent fiscal and monetary policies, the Philippine economy can progress towards fulfilling its growth objectives. BSP Governor and Chairman of the Monetary Board (MB) Eli M. Remolona Jr. previously suggested that key policy rates could be reduced by another 50 bps this year, with the initial 25-bps cut likely in the first half and a subsequent 25-bps cut in the second half. Finance Secretary Ralph G. Recto has echoed this sentiment, emphasizing that the “low and steady” inflation in January provides room for the MB, on which he also serves as a member, to further cut rates to stimulate household spending and economic growth
Philippine Bond Market Inflation Food Prices Fuel Prices Economic Growth Capital Formation Bangko Sentral Ng Pilipinas (BSP) Monetary Policy
Philippines Latest News, Philippines Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Philippines Raises $3.5 Billion in Bumper Bond OfferingThe Philippine government successfully raised $3.5 billion through a dual-tranche dollar bond and euro bond offering, demonstrating strong investor confidence and capital market access. The transaction involved a 10-year dollar bond, a 25-year sustainability dollar bond, and a 7-year euro-denominated sustainable bond. Proceeds will be used for general budget financing and to support sustainable infrastructure projects.
Read more »
Philippine Singer Launches Movement to Unite Filipinos Against China in West Philippine Sea DisputeRannie Raymundo, a popular Filipino singer, has joined forces with the Fraternal Order of Philippine Eagles to spearhead a nationwide movement aimed at rallying Filipinos in response to escalating tensions in the West Philippine Sea. The WPS Eagles Movement seeks to foster patriotism, galvanize collective action, and counteract Chinese disinformation campaigns.
Read more »
Philippine Coast Guard Monitors Chinese Vessel in West Philippine SeaThe Philippine Coast Guard (PCG) is closely watching a Chinese Coast Guard (CCG) vessel operating illegally off the Zambales coast in the West Philippine Sea (WPS). The PCG deployed the BRP Gabriela Silang to keep a protective distance from the CCG vessel, preventing its approach to the Philippine coastline. Despite the CCG's radio challenges alleging a violation of maritime collision regulations, the PCG maintains that the core issue is the CCG's illegal presence in Philippine waters.
Read more »
Philippine Stock Exchange to Acquire Controlling Stake in Philippine Dealing System Holdings Corp.The Philippine Stock Exchange Inc. (PSE) is reallocating P110 million from a 2018 stock rights offering to acquire a controlling stake in the Philippine Dealing System Holdings Corp. (PDSHC). This move follows a series of share purchases by the PSE from other PDSHC stakeholders, aiming to consolidate the country's equities and fixed-income exchanges. The PSE's equity stake in PDSHC currently stands at 55.53 percent.
Read more »
Philippine Stock Exchange Reallocates Funds to Acquire Controlling Stake in Philippine Dealing SystemThe Philippine Stock Exchange Inc. (PSE) is using funds from a 2018 stock rights offering to acquire a controlling stake in the Philippine Dealing System Holdings Corp. (PDSHC). This move consolidates the country's equities and fixed-income exchanges.
Read more »
Philippine Fishermen Sound Alarm Over US-Led Military Exercises in Philippine WatersFilipino fishermen express deep concerns over the environmental and social impacts of joint military exercises conducted by the United States in Philippine waters. They argue that these exercises disrupt their livelihoods, cause psychological trauma, and damage fragile marine ecosystems.
Read more »