MOODY’S Analytics, a unit of Moody’s Corp., expects the Bangko Sentral ng Pilipinas to keep the benchmark policy interest rate steady at 6.25 percent in its November meeting despite the elevated inflation.
“Monetary Board members will have the benefit of September-quarter GDP results and the October inflation print before having to make their decision. We expect them to leave the policy rate at 6.25 percent,” Moody’s Analytics said in a report Monday.
It said the BSP’s monetary policy meeting in November “will be one to watch.”
“It looks increasingly unlikely that headline inflation will reach BSP’s 2 percent to 4 percent target before the end of 2023,” it said.
The BSP hiked interest rates by 425 basis points since 2022 to rein in inflation before pausing in the last four meetings.
Finance Secretary Benjamin Diokno said over the weekend he remained confident that monetary authorities would consider the latest relevant information before deciding on whether or not to tweak the policy stance in the next meetings.
Diokno said in a briefing these data include the gross domestic product, inflation and labor market conditions.
“The decision on policy rate is always based on the latest information. The next policy meeting is on Nov. 16. The third-quarter GDP will also be announced in November. Then, there will be another labor situation report,” Diokno said.
He said decision making is better when aided by more frequent data.
“There is a slowdown globally… that is the consensus now. Then you look at the other countries… Who knows, maybe next time around inflation goes down… Let us not decide on just one observation,” Diokno said.
National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan earlier expressed objection to a further hike in interest rates because it might significantly hurt economic growth.
Inflation peaked at 8.7 percent in January 2023 before easing in the next six months. Inflation in August picked up again to 5.3 percent and further to 6.1 percent in September 2023. This brought the average in the first nine months to 6.6 percent, above the BSP’s target range of 2 percent to 4 percent.
Balisacan said further raising interest rates would have long-term effects in the succeeding 12 months.
Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. earlier said a rate hike in November 2023 might not be the last one in its tightening cycle, given the persistent elevated inflation.
“We are not convinced it will be the last one in the cycle… We are still on a hawkish stance,” Remolona said in an interview on Bloomberg TV.