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MANILA – HSBC said the Bangko Sentral ng Pilipinas is likely to keep policy rates steady today and for the rest of the year.
In a research note, Trinh D. Nguyen, HSBC economist, said the BSP “has room to sit back and watch how price and external conditions will behave.”
This is on the back of rising inflation pressures and expectations that Philippine gross domestic product growth would be better this year.
Despite the slight easing in inflation in May, “this is not expected to last much longer,” Nguyen said, referring to last month’s drop to 2.9 percent from April’s three percent.
She said ample liquidity as well as steady domestic demand will keep inflation risks “tilted to the upside.”
Having said that, HSBC still sees Philippine inflation staying at the low-end of the BSP’s full-year target range of three to five percent.
“The external environment looks increasingly challenging, but growth prospects in the Philippines have brightened. With trade performing much better than expected and GDP growth for the year likely exceeding four percent, we believe the BSP will prudently sit still to monitor price and external conditions at the next meeting on Thursday. We expect rates to stay steady for the rest of the year,” Nguyen said.
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