The Bangko Sentral ng Pilipinas (BSP) may lift key interest rates only once this year—most likely by 25 basis points in its next policy rate-setting this March—amid muted inflation forecasts, according to a top economist of British banking giant HSBC.
Hong Kong-based Frederic Neumann, managing director and cohead of Asian economic research at HSBC, said in a press chat on Friday that despite heightened jitters in the past few weeks, inflation rate in the Philippines could average at 3.7 percent this year or lower than the BSP’s adjusted forecast of 4.3 percent.
“One rate hike will be enough for the BSP this year because we don’t see as much inflation,” Neumann said.
“Our view is that the BSP is sort of taking a more patient approach, doesn’t want to over-hassle things [noting that] some of the inflation pressures are transitory. But it seems to us that March will be more of a likely timing for a rate hike, partly to control inflation expectations and partly to express the BSP’s view that inflation will be contained,” he said.
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Previously, HSBC’s call was for the inflation-targeting BSP to hike interest rates by the second quarter.
After many years of the inflation rate averaging at the low end of the BSP’s 2-4 percent target range, the central bank is bracing for a faster pace of consumer price increases this year especially with the new tax reform program in place.
