Economists are forecasting that the Bangko Sentral ng Pilipinas (BSP) will likely keep its policy rates steady during the upcoming monetary policy meeting on August 17, as inflation moderates and the peso demonstrates resilience.
Metrobank subsidiary First Metro Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P) anticipate the BSP to retain the 6.25 percent policy rate for the remainder of the year, given the recent decrease in July’s inflation.
The US Federal Reserve’s 25 basis points rate hike is being observed by the market, which generally seeks a 100 to 125 basis points interest rate differential between US rates and BSP rates to stabilize the exchange rate.
Analysts from the Bank of the Philippine Islands (BPI) also suggest that BSP rates will remain unchanged as inflation approaches the government’s target range, and the behavior of the local currency may hinge on the Federal Reserve’s actions.
Despite the declining consumer price index (CPI), BSP Governor Eli M. Remolona mentioned that rate hikes are still under consideration due to new price pressures and potential risks in the economy.
The BSP projects further inflation reduction to 4.6 percent in the third quarter and three percent in the fourth quarter of 2023.
