Bangko Sentral ng Pilipinas Governor Felipe Medalla. Photo from the BSP’s Facebook page
The Bangko Sentral ng Pilipinas (BSP) is expected to extend the pause on benchmark rate hikes for the next quarter or two, according to BSP Governor Felipe Medalla.
In an interview with Bloomberg TV, Medalla expressed confidence that the fight against inflation has made progress, with the monthly headline inflation rate dropping from a peak of 8.7 percent in January to 6.1 percent in May.
Medalla stated that there were minimal arguments for a rate hike or rate cut in the recent policy meeting held on June 22. As a result, the BSP’s overnight borrowing rate remained unchanged at 6.25 percent for the second consecutive meeting.
Medalla expects inflation to stay below 4 percent by October or November, barring any unforeseen surprises. Economists, such as Miguel Chanco from Pantheon Macroeconomics, predict that the BSP will maintain its current rate until the fourth quarter of this year, as inflation remains slightly above the target range of 2 to 4 percent.
The BSP’s aggressive tightening measures are expected to ease in the fourth quarter, with potential rate cuts of 50 basis points, assuming no significant price shocks occur. Goldman Sachs also predicts rate cuts by the BSP in the first semester of 2024, coinciding with the loosening of monetary policy by the US Federal Reserve.
However, the Bank of the Philippine Islands believes it may be premature to conclude that the BSP’s rate hiking cycle is over. Depending on the reaction of the foreign exchange market to potential Fed rate hikes, one or two more rate hikes may still occur later this year, according to the bank.
ING Bank, on the other hand, expects the BSP to maintain its policy rate for two more meetings if inflation continues to moderate. They also foresee the possibility of rate cuts once inflation returns to the target range.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
Denial of responsibility! Samachar Central is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
