THE Bangko Sentral ng Pilipinas (BSP) is likely to hold on to their low rates throughout the year, as the economy continues to grapple with renewed restrictions in an effort to contain the country’s Covid-19 cases, private economists said.
In separate analyses on Wednesday, economists at the ING Bank and Standard Chartered forecast that BSP will likely keep their monetary policy rates unchanged in their upcoming meeting today (Thursday), and for the rest of 2021.
“With inflation on the downturn and the economy still struggling with the ill effects of mobility curbs we expect Diokno to stick to his guns, pledge accommodation and skip any mention of a rate hike or the implementation of his exit strategy for at least another year,” ING Bank economist Nicholas Mapa said.
Similar views have been shared by economists at Standard Chartered.
“We expect inflation to ease in the second half of the year as the low base from 2020 fades; this should provide BSP with space to maintain easy monetary policy, at least through the rest of 2021,” Standard Chartered said.
“Credit growth has declined to multi-decade lows on lukewarm private-sector activity; we expect it to remain muted this year on subdued sentiment. We expect BSP to keep rates on hold through 2021 and 2022, on a moderation in inflation combined with still-soft growth and subdued sentiment,” it added.
Earlier this week, Moody’s Analytics, the research arm of Moody’s Group also said the BSP will likely “delay further action” as near-term prospects “remain worrisome” for the Philippines. The next monetary policy meeting today,June 24, is the fourth such meeting of the Central Bank for the year.
In the first three monetary policy meetings for the year, the BSP had opted to keep their rates at record-low levels despite rising inflation numbers in order to support the local economy.
“The BSP affirms that maintaining an accommodative stance should quicken the economy’s transition toward a sustainable recovery. The BSP remains committed to deploying its full range of instruments as appropriate in support of its price and financial stability mandates,” BSP Governor Benjamin Diokno earlier said.
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