The monetary authorities are expected to keep the rate at which the Bangko Sentral ng Pilipinas (BSP) borrows from or lends to banks unchanged when the monetary board (MB) meets on Thursday this week to decide which way interest rates go.
The expert view, such as from Moody’s Analytics, for instance, is for the policy rate to keep steady at 5.75 percent.
But earlier, Finance Secretary Ralph Recto, who sits at the seven-man, policy-making MB, noted that the central bank is unlikely to one up the US Fed whose leadership have signalled that policy adjustments at the world’s largest market could come no earlier than December this year.
The country’s top central banker, Eli Remolona himself, also earlier expressed the view that a recalibration of the cost of money in the Philippines may be forthcoming no earlier than August this year. Remolona had said the next policy rate cut, which could flood the monetary system with liquidity in the billions of pesos, could be as deep as 50 basis points.
The BSP scaled back its benchmark interest rate by 25 basis points to 5.75 percent when the monetary authorities last met the previous December when they agreed to lower the benchmark a third time in series. That decision, experts noted, met market expectations.
This develops in the wake of inflation, or the rate of change in prices, unchanged in January at 2.9 percent, which proved than the market consensus of only 2.7 percent.
Moody’s Analytics said food prices have driven the country’s inflation higher in January, which proved at the upper end of the BSP’s forecast range of 2.5 percent up to 3.3 percent.
Price pressures mainly came from the food category as the impact of the spate of storms in late 2024 lingers on. Excluding certain food and energy items, core inflation cooled to 2.6 percent from 2.8 percent, Moody’s Analytics noted.
