Moody’s Analytics sees the Bangko Sentral ng Pilipinas (BSP) lifting interest rates in June this year as Russia’s Invasion of Ukraine has heightened upside risks to inflation.
The research arm of Moody’s Corp. believes the central bank’s Monetary Board would keep the benchmark interest rate at an all-time low of two percent on Thursday as inflation cooled to three percent in February from a peak of 4.4 percent in August last year.
However, Moody’s Analytics said the BSP would likely keep a close watch on inflation expectations due to the impact of the Russia-Ukraine war on global energy and food prices.
“Monetary policy is expected to start normalizing in the September quarter. Movement restrictions to slow the spread of the Omicron variant of COVID-19 have hurt domestic demand in the opening months of 2022,” Moody’s Analytics said.
After cutting interest rates by 200 basis points in 2020 to cushion the impact of the global health crisis, the central bank has maintained an accommodative monetary policy stance to allow the economy to fully recover from the recession.