STEADY RATES SEEN. Michael Adrian Vergara, SLIMTC head of equities and global funds, on Tuesday (Sept. 12, 2023) says the Bangko Sentral ng Pilipinas (BSP) will likely keep benchmark interest rate steady until mid-2024. The central bank earlier said the decision to keep policy rates unchanged was based on expectations that headline inflation will go down. (Photo courtesy of SLIMTC)
MANILA – The Bangko Sentral ng Pilipinas (BSP) will likely keep the benchmark interest rate steady until mid-2024, an official of financial services firm Sun Life Investment Management and Trust Corporation's (SLIMTC) said Tuesday.
"For me, the BSP has tended to be...to move in line with the Fed. So it's a matter of them managing the peso. It's a matter of them managing liquidity within our market," SLIMTC head of equities and global funds Michael Adrian Vergara said during the Sun Life Prosperity World Income Fund product launch virtual media conference.
Vergara said the current consensus is that the Federal Reserve will start cutting rates in the middle of 2024.
The BSP's Monetary Board kept policy rates unchanged during its meeting last Aug. 17.
The BSP's overnight reverse repurchase facility remained at 6.25 percent, overnight deposit rate at 5.75 percent, and overnight lending rate at 6.75 percent.
"They [Fed and BSP] tend to move together. So again I would look at the middle of next year as the starting point or at least the basis for that [cut]," Vergara said.
Earlier, BSP Governor Eli Remolona Jr. said the central bank's decision to keep policy rates unchanged was based on expectations that headline inflation will go down.
"Latest baseline projections continue to show a return to inflation target in the fourth quarter of 2023 despite a generally higher path for inflation relative to the previous forecast from the monetary policy meeting in June, reflecting mainly the impact of higher international oil prices," he said.
The country's headline inflation picked up to 5.3 percent in August.
Despite the uptick, economic managers, however, are optimistic that headline inflation will ease and settle within the BSP's 2 to 4 percent target range by the end of the year. (PNA)
