Page 4 - Jun Neri News Today

Expect the Bangko Sentral ng Pilipinas to deliver more rate hikes and bring the benchmark rate to at least six percent this year, as inflation soared above the government’s target last year, top bank economists said.

Looking under the hood, the Philippine economy sputtered its way to close out an otherwise chaotic year. 

Following its rate-setting meeting on Thursday, the Monetary Board raised interest rates by 50 basis points.

Ayala-led Bank of the Philippine Islands sees the country’s economic growth slowing to below six percent but is expected to avoid recession next year amid external headwinds.

The Bangko Sentral ng Pilipinas may deliver more but less aggressive interest rate hikes after delivering a cumulative 300-basis-point rate increase so far this year to anchor inflation expectations and temper downward pressures on the peso, economists said. In a report, DBS Bank economist Chua Han Teng said further tightening is expected from the still-hawkish BSP even after 300 basis points worth of rate hikes since May.

President Marcos’ decision to reopen the economy proved to be the right step in boosting economic growth, as seen in the better-than-expected 7.6 percent gross domestic product growth for the third quarter, according to analysts.

Inflation may hit up to 9.3 percent in December and remain elevated until the first quarter of next year given high global commodity prices and the lingering impact of recent typhoons, economists said.

The Bangko Sentral ng Pilipinas is raising key policy rates by a huge 75 basis points (bps), matching the aggressive hike delivered by the US Federal Reserve, as a preemptive move to prevent the peso from depreciating further before the scheduled rate-setting meeting of the BSP two weeks from now.

Inflation likely accelerated in September as the peso slumped to record low levels, coupled with higher food prices and more expensive electricity, according to economists.

Economists see more rate hikes for the remainder of the year as the Bangko Sentral ng Pilipinas intensifies efforts to tame soaring inflation and stabilize the peso.