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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.