Financial markets await BSP move on interest rates


Posted at Nov 15 2018 10:54 AM

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MANILA -- Financial markets are awaiting the Bangko Sentral's move on interest rates Thursday, with a "consensus" building that a 25-basis point increase was forthcoming, an analyst said.

Seven out of 13 economists in a Reuters poll expect the Bangko Sentral ng Pilipinas to hike the overnight borrowing rate by 25 basis points to 4.75 percent, while the other 6 expect it to pause after raising rates by a total 150 basis points since May.

Monetary authorities can also "afford to pause at this time" given the weakness in US equities and lower oil prices in the world market, said BDO Unibank chief market strategist Jonathan Ravelas.

"I think one thing to consider, inflation may be topping out or peaked at this time," Ravelas said, explaining why the BSP could pause from hiking rates at least for a month.

The BSP raised the overnight borrowing rate by a total of 150 basis points in 4 consecutive meetings this year, bringing the benchmark to 4.5 percent.

Gross domestic product grew at a slower-than-expected 6.1 percent in the quarter ending September, as inflation in October held at 6.7 percent, the fastest in nearly a decade.