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Business

BSP expected to keep policy settings

Kathleen A. Martin - The Philippine Star

MANILA, Philippines - ING Manila expects the Bangko Sentral ng Pilipinas to keep its policy settings unchanged on its next policy meeting next week as inflation remains manageable and domestic growth continue to be strong.

“We believe there is no compelling reason to alter current BSP monetary policy settings,” the bank said in a research note yesterday.

“The slightly higher February headline and core inflation and developing energy price pressures in the coming months argue for a steady policy stance for now,” ING said.

Inflation climbed to 2.5 percent in February from 2.4 percent in January on increases in pump prices and other utility rates. The 2.4-average in the first two months of the years is well-within the government’s two to four percent target for inflation this year.

ING stressed that the downtrend in food prices is being offset by rising energy and utility pressures and such scenario should keep the rate from further declining from its current level.

At the same time, the bank said growth prospects remain rosy, allowing the BSP to maintain key policy rates.

“The economy also does not need additional accommodation from the monetary authorities for now even as there is leeway to do so,” the bank said.

The economy expanded by 6.1 percent last year, short of the 6.5 to 7.5 percent goal but still the second fastest in Asia during the period.

“The need for additional monetary accommodation could become important if government spending falters again similar to 2014 with a very erratic spending performance. Our 6.7 percent 2015 full-year growth (forecast) reflects a strong performance from government,” ING said.

The bank’s projection for growth this year is below the government’s seven to eight percent target.

The BSP’s policymaking Monetary Board left the overnight borrowing and overnight lending rates unchanged at four percent and six percent, respectively, last month as inflation expectations fell within the target ranges until 2016.

BANGKO SENTRAL BANK GOVERNMENT GROWTH INFLATION ING MONETARY BOARD PILIPINAS POLICY
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