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MANILA - DBS said the Bangko Sentral ng Pilipinas is unlikely to change its current policy rates today in light of last month's inflation spike and sustained growth in exports despite the contraction in electronics shipments.
In a research note, the Singaporean bank on Thursday said the increase in inflation to 3.8 percent in August "may give the BSP reason to pause in monetary easing today."
The central bank already reduced its policy rates by a total of 75 basis points so far this year in a bid to insure the Philippine economy from the global slowdown brought about by the Euro zone debt crisis and the weak recovery of the US.
The BSP's overnight borrowing and lending rates now stand at record lows of 3.75 percent and 5.75 percent, respectively.
DBS said the central bank's rate cuts came at a time when inflation was "still very low." The BSP targets inflation to range from 3-5 percent this year. So far, prices have averaged 3.2 percent or near the low end of the central bank's target.
"The outlook has changed slightly but we still think another 25 basis points rate cut will come by the end of this year," DBS said, ascribing the August increase in inflation to unfavorable weather and firm oil prices in the global market.
The Singaporean bank also pointed to exports holding up "surprisingly well."
Non-electronics exports managed to offset the 26 percent drop in electronics shipments, causing July receipts to increase by 8 percent year-on-year.
"As such, there is no immediate need to further lower the OBR, until there is a further deterioration in export numbers," DBS said.
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