MANILA -- ANZ Research discounted any additional adjustments in the Bangko Sentral ng Pilipinas’ (BSP) key policy rates until 2019, if global oil prices remain relatively steady and if supply-side measures put in place to address inflation are effectively implemented.
In a study, the Australia, New Zealand and Asia-focused research firm dubbed as “pre-emptive” the 25 basis points increase in the BSP rates Thursday this week.
It also noted the cut in the central bank’s average inflation forecast for 2019 to 3.5 percent from 4.3 percent.
“This presumably reflects the impact of non-monetary measures,” it said, referring to the programs put in place to address supply constraints on food items like rice, which in turn, were implemented to address the elevated inflation rate.
ANZ earlier projected one last hike in BSP's key rates before yearend. That prediction became reality with Tuesday's 25 bps rate hike.
With the last rate increase already delivered, the economic research firm does not see any additional movement in BSP rates until next year.
“Should global oil prices remain steady, the effective execution of supply-side measures by the government should provide the central bank with room to keep rates on hold in 2019, in our view,” it added.
The series of BSP rate hikes this year, which totaled to 175 basis points in all, were made to help anchor inflation expectations and ensure price stability.
Inflation averaged at 5.1 percent in the first 10 months of the year, way above the government’s two to four percent target band for 2018-20.
However, rate of price increases last October is flat at 6.7 percent due to deceleration of inflation of the food items, among others, which authorities have attributed to the non-monetary measures implemented since last September.
Monetary officials expect inflation to go back to within-target levels by 2019, with the help of both the monetary and non-monetary policies implemented starting this year. (PNA)
