BSP move in focus as US Fed hike looms
A possible interest rate hike in the United States is putting the Bangko Sentral ng Pilipinas next move in focus, with analysts offering differing views on whether further tightening is needed and how soon it should come.
The Bangko Sentral ng Pilipinas (BSP) is weighing its next move in interest rates amid expectations of a possible hike by the United States Federal Reserve. Analysts are divided on whether further tightening is necessary and when it should occur. Jonathan Ravelas, a senior adviser at Reyes Tacandong & Co., suggests an off-cycle BSP rate increase of 25 to 50 basis points, potentially happening today if the Fed raises rates by 25 basis points.
Chinabank's Domini Velasquez, however, doubts the need for such a move and expects the BSP to raise rates by 25 basis points at its October meeting. Security Bank's Angelo Taningco also anticipates a rate hike by October but believes the probability of an off-cycle hike is low, as the Fed rate hike is already priced in the market.
The interest rate differential between the Philippines and the US could influence investment decisions, with higher oil prices and US interest rates keeping pressure on the peso. Velasquez emphasizes that the BSP's decision should be driven by its inflation outlook and the economy's ability to handle higher interest rates, rather than preserving the rate gap.
Taningco forecasts another BSP rate hike in October, bringing the benchmark rate to 5.25 percent, where it is expected to remain through year-end.
Written by urgent.news from Philippine Star Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
