No interest rate adjustments seen

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is seen to keep policy rates unchanged in its meeting on Oct. 1 in the absence of meaningful changes to outlook, according to IHS Markit.

In a research brief over the weekend, the market intelligence firm said significant recovery to economic activity cannot be expected until the COVID-19 outbreak is contained.

“The Philippine central bank meets next week, though no change to the monetary policy is expected despite inflation coming in at the lower end of the target range of two up to four percent.

“The economic outlook remains gloomy, with a meaningful recovery not expected until the pandemic outbreak is contained,” the report said.

IHS Markit noted that the August reading of the Purchasing Managers’ Index (PMI) signaled a steeper decline in manufacturing conditions after business activity was again affected by a two-week strict lockdown during the month.

The headline IHS Markit Philippines Manufacturing Purchasing Managers’ Index (PMI) fell anew to 47.3 in August from 48.4 in July, signaling a stronger deterioration in operating conditions.

The reading, however, was still above the record low of 31.6 in April for the Philippines.

“Analysts will eagerly monitor the September release following an easing of some virus-related restrictions,” said IHS Markit.

Last week, BSP governor Benjamin Diokno said the central bank could keep the country’s accommodative monetary policy stance to help the economy recover from the impact of the pandemic.

After taking a prudent pause last Aug. 20, monetary authorities are likely to maintain the current monetary setting to allow previous actions to work their way through the economy.