Philippine central bank keeps interest rate steady as expected
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THE Philippines left its benchmark interest rate unchanged for a second straight meeting as inflation slowed, approaching closer to the central bank’s target.
The Bangko Sentral ng Pilipinas maintained the target rate at 6.50 per cent on Thursday (Dec 14), as seen by 23 of 24 economists surveyed by Bloomberg. One predicted a quarter-point increase.
The decision to leave borrowing costs unchanged at a 16-year high follows inflation moderating further to 4.1 per cent in November, just shy of the upper band of the central bank’s 2 per cent-4 per cent goal. The pause came hours after the US Federal Reserve kept rates steady and signalled a pivot to easing next year.
Still an easing might be “premature” for the BSP in Governor Eli Remolona’s assessment recently, as he flagged price risks including from the El Nino weather phenomenon that’s expected to persist through the first half of 2024 and potentially drive up food costs.
El Nino could crimp farm output while a resurgence of oil prices could spark fresh risks in a country that imports almost all of its fuel needs and is among the world’s biggest buyer of rice.
A seasonal pick-up in overseas remittances during the year-end holidays will likely help the local currency extend its gains, putting the peso on track to outperform many peers in the region this year. That bolsters the BSP’s space to stand pat.
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All but one of the 24 economists in a Dec 5-11 Reuters poll expected the central bank to leave its target reverse repurchase rate unchanged on Thursday. One predicted a quarter-point hike. BLOOMBERG
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