INTERNATIONAL think tank Moody’s Analytics said the Bangko Sentral ng Pilipinas (BSP) is likely to keep its rates at record lows in its upcoming meeting this week, as near-term prospects for the Philippine economy remain “worrisome.”
In a research analysis published on Monday, Moody’s Analytics—the research arm of the Moody’s group—said the Philippines’s Central Bank is expected to keep the benchmark policy rate steady at 2 percent in its June announcement.
“The near-term prospects remain worrisome for the Philippines as the country copes with an intense domestic outbreak of Covid-19, which has necessitated the extension of restrictions in the capital city and nearby provinces until the end of June,” Moody’s Analytics said.
“Although the Central Bank has responded to the crisis with rate cuts and substantial liquidity-easing measures, it is expected to retain ammunition for now and delay further action until restrictions are eased and sectors can respond to new stimulus,” it added.
In a separate analysis, ING Bank economist Nicholas Mapa said they expect BSP’s rates to stay anchored at 2 percent until at least June of 2022, to support the local economy.
“The notion that we need to calibrate a preemptive move to prepare for a rate hike a year and a half down the line may not work in the best interest of the economy and would translate to BSP hitting the brakes just when we get the car inching forward. This could leave us susceptible to being the only car left on the track, wobbling further as all others zoom past us on the road to economic recovery,” Mapa said.
The BSP is slated to have their next monetary policy meeting on Thursday, June 24. This will be the fourth monetary policy 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 their record-low levels despite rising inflation numbers 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.