Manila: The Philippine central bank is poised to extend its interest-rate pause for a third straight meeting, as the focus shifts to when the authority might start easing monetary policy amid cooling price pressures.
All 20 analysts in a Bloomberg survey see the Bangko Sentral ng Pilipinas (BSP) keeping its benchmark target rate at 6.5%.
While headline inflation at 2.8% in January is well within the central bank’s 2% to 4% target range, policymakers led by governor Eli Remolona are expected to bide their time – as they await the US Federal Reserve’s (Fed) policy actions, as well as gauge wider risks from surging food prices.
“Everyone would like to get the rate-cut party started, but the BSP will wait and see what the Fed will be doing in the coming months,” said Ruben Carlo Asuncion, Union Bank of the Philippines’ chief economist.
The Philippine economy also grew faster than South-East Asian peers last year even as the central bank continued its aggressive monetary tightening campaign, providing scope for the BSP to keep borrowing costs at a nearly 17-year high and hold off a pivot to easing for now.
Upside risks to headline inflation from food and transport prices will likely keep monetary authorities on their toes. Rice inflation has surged to a 15-year high, and El Nino-induced drought could disrupt food supply and drive costs up. — Bloomberg
