Monetary Board seen keeping rates unchanged
Credit to Author: ANNA LEAH E. GONZALES| Date: Wed, 06 Feb 2019 16:25:47 +0000
Monetary authorities will likely keep key interest rates unchanged today, February 7, but could start easing later this year if inflation continues to slow, analysts from ING Bank Manila and Moody’s Analytics said.
“The BSP (Bangko Sentral ng Pilipinas) is still widely expected to keep policy rates unchanged and await more data points to validate their inflation path,” ING Bank Manila senior economist Nicholas Antonio Mapa told The Manila Times.
Mapa made the statement after the Philippine Statistics Authority reported that inflation eased anew to 4.4 percent last month, from 5.1 percent in December, due to slower food and non-alcoholic beverage, tobacco, and transport price increases.
The BSP’s policymaking Monetary Board hiked key interest rates five consecutive times last year, or a total of 175 basis points, to temper rising inflation that peaked at an above-target 6.7 percent in September and October.
Economic managers are confident that consumer price growth will further ease in the near term and settle at 3.2 percent this year and 3.0 percent in 2020, within the central bank’s 2.0-4.0 percent target.
“If inflation continues to trend lower and edge back within target by March, the BSP may be afforded some leeway to cut policy rates by the May policy meeting to give the economy a much-needed break after slamming hard on the brakes in 2018 by hiking 175 bps,” Mapa said.
Key interest rates could by trimmed 25 basis points at the May meeting, he added.
Moody’s Analytics economist Katrina Ell, meanwhile, also believes that policy rates could remain unchanged this month.
A sustained cooling in inflation, she added, “increases the odds that the central bank will start reversing earlier monetary tightening in the first half of 2019.”
“We think the central bank will keep rates steady at its February meeting and attach a 30 percent chance that easing will occur in the first half of 2019,” Ell said.
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