BENGALURU: The Philippine central bank will kick-off its tightening cycle tomorrow, much earlier than previously thought, joining peers around the world in a race to tighten monetary policy to tackle rising inflation, a Reuters poll found.
With economic growth in the South-East Asian nation at its fastest in nearly a decade and inflation at a more than three-year high, the Bangko Sentral ng Pilipinas (BSP) is under pressure to act now to prevent the economy from overheating.
The May 12-16 Reuters poll showed nearly two-thirds of economists, 11 of 17, expected the BSP to hike its key overnight reverse repurchase facility rate by 25 basis points to 2.25% at its meeting tomorrow. The remaining six expected no change.
That was an abrupt change in expectations from a survey taken last month when most economists predicted a rate hike to come next quarter.
“A shift in the balance of risks from growth to inflation, after strong growth last week and high inflation earlier in the month, led us to forecast that BSP will hike rates at its May meeting,” noted Shreya Sodhani, an economist at Barclays.
“However, we acknowledge this is a close call, with the possibility of a delay to June.”
Governor Benjamin Diokno, who just last month said they may consider a rate hike in June, changed his tone last week and said they stood ready to adjust monetary policy settings if they saw signs of demand-driven inflation.
Economists in the poll also expected the BSP to pick up the tightening pace. While a majority expected the benchmark rate to rise to 2.50% by end-September, seven economists predicted it to reach 2.75% or higher.
- Reuters
Created by Tan KW | Mar 28, 2024
Created by Tan KW | Mar 28, 2024
Created by Tan KW | Mar 28, 2024