Analysts from several economic research firms have ruled out the possibility of the Monetary Board raising its policy rates within the year following the latest decision to keep rates steady.
According to London-based Capital Economics, the decision of the Bangko Sentral ng Pilipinas (BSP) to maintain its policy stance was “widely expected.”
“But while the consensus among analysts is that the BSP will hike rates twice this year, we continue to think that rates will be left unchanged in 2017,” Alex Holmes, assistant economist at Capital Economics said in a research note.
Holmes noted that such consensus was partly based on the rapid pace of credit growth, which grew by about 20 percent year-on-year in the first two months of 2017.
BUSINESS
BUSINESS
BUSINESS
However, this factor was not mentioned in the BSP’s statement following the Monetary Board’s meeting on Thursday.
“That said, we doubt that the BSP will respond to rapid credit growth by raising rates. Relative to GDP, the change in private sector credit has been relatively small,” Holmes said. “What’s more, much of the new credit is being directed to productive areas of the economy, such as manufacturing and infrastructure.”
