Economists see hike in BSP key rates in 2017 as inflation sustains rise
By Joann Santiago
MANILA, Dec. 6 (PNA) - Economists see hikes in the Bangko Sentral ng Pilipinas’ (BSP) key rates starting the second quarter of 2017 after Philippine inflation rate rose to within-target levels since September this year.
Inflation rose to 2.3 percent last September from month-ago’s 1.8 percent due to impact of higher oil prices.
It remained at the same level last October but picked-up anew in November to 2.5 percent, bringing the year-to-date level to 1.7 percent.
Amid these spikes, average inflation rate remained below the government’s two to four percent target for 2015-18.
In a research note dated Nov. 6, ING Bank Asia chief economist Tim Condon said inflation had risen from low base because of the impact of higher oil prices, particularly on utilities sub-component.
The bank forecasts the country’s inflation to average at 3.1 percent next year and 3.3 percent in 2018.
These are higher than central bank's latest projections of three percent and 2.9 percent for 2017 and 2018, respectively.
Thus, ING projects the central bank to start increasing rates in the second quarter of 2017, “a quarter ahead of the consensus.â€
In another report, Melbourne-headquartered ANZ sees the BSP to be among the first Asian banks that will increase rates next year, particularly in the third quarter of the year.
This, as it projects inflation to average at 3.1 percent next year and 3.2 percent in 2018.
“The expansionary stance of the government in 2017 will further support the resilient fundamentals,†it said.
ANZ also noted that since transmission lag of any monetary policy decision takes about 15 to 24 months a rate hike in the third quarter next year is possible.
“This should give the central bank sufficient time to migrate structural excess liquidity to its term deposit facility,†it added. (PNA)
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