THE Bangko Sentral ng Pilipinas (BSP) is expected to hike its rates twice more for the year, despite the recently-reported slower growth in the country.
Security Bank Corp. Chief Economist Robert Dan J. Roces said the central bank will likely hike its rates by 50 basis points in the monetary policy-setting meeting on Thursday.
Roces said he sees another rate hike coming by 25 basis points in the succeeding meeting. After which the BSP will likely pause its tightening cycle.
“Inflation remains the key consideration as it affects growth and reopening and thwarts consumption—the main engine of the economy. Thus, the deeper-than-expected slowdown in second-quarter GDP [gross domestic product] is unlikely to deter the BSP from raising interest rates by 50 basis points on August 18,” Roces said.
“Sticky inflation, which actually weakened private consumption in the second quarter and is poised to do so again this quarter, will compel the BSP to remain hawkish. We also expect another 25 basis point [hike] in its September meeting before a pause in the fourth quarter to give way for the peak consumption and remittance season,” the economist added.
Earlier, BSP Governor Felipe M. Medalla assured markets of another rate hike in their scheduled meeting in August.
The BSP chief said the hike will be to the tune of 25 basis points or 50 basis points, depending on the latest data on the economy during that time.
The governor also said the Central Bank is “prepared to take all necessary policy action” to adequately tame inflationary pressures.
“The BSP recognizes the broadening of price pressures amid the emergence of second-round effects, including the approved wage and fare hikes as well as elevated inflation expectations,” Medalla earlier said.
“The BSP is prepared to take all necessary policy action to bring inflation toward a target-consistent path over the medium term and deliver on its primary mandate of price stability. The upward adjustment in monetary policy rates in May and June and the off-cycle adjustment in July should help moderate inflation expectations,” he added.