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Analysts predict that additional increases in interest rates may not significantly affect inflation.


Rewritten: Written by Keisha B. Ta-asan, a reporter.

in the open market

The influence of the Bangko Sentral ng Pilipinas (BSP) in the open market may be restricted.fl

Analysts stated that the proposed regulation would most likely impede economic growth.

According to Nicholas Antonio T. Mapa, a senior economist from ING Bank N.V. Manila, increasing interest rates at this time will not have a large effect on inflation.

“What rate hikes will be eff

He stated in a written message that the most effective way to achieve this would be a comprehensive decline in the rate of growth.

Governor Eli M. Remolona, Jr. of the BSP

The statement made on Wednesday suggested that a 25-basis-point increase may be considered at the upcoming policy review by the Monetary Board on Nov. 16.

The central bank, BSP, has maintained the main interest rate at 6.25%, which is close to the highest level in 16 years, for the past four meetings. If there is an additional increase of 25 basis points, the benchmark rate will reach 6.5%.

Secretary Arsenio M. Balisacan of the National Economic and Development Authority cautioned that implementing stricter monetary policies could potentially harm the economy and burden consumers who are already grappling with high costs.flation.

Mr. Mapa pointed out that increased borrowing expenses would impact the ability of banks to lend, as this is connected to the creation of capital and the growth of the gross domestic product (GDP).

He stated that implementing further restrictions would likely lead to a significant decrease in economic growth, but would only have a small effect on inflation. However, this impact would only be seen after the economy experiences a decline to its lowest levels in several years.

ING Bank lowered its Philippine growth forecast to 4.7% (from 4.8% previously) for this year and to 4.5% (from 4.7%) for 2024. Both estimates are below the government’s 6-7% and 6.5-8% target for 2023 and 2024, respectively.

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The driving force behind action is limitations in supply and tensions between different countries.

According to Mr. Terosa, in the Philippines, businesses and investments are more affected by increases in interest rates than consumers. As a result, the overall impact of rate hikes on the country’s economic growth is typically negative. It seems that the adverse effects of higher interest rates and inflation can persist in the long run.

Headline inflth consecutive month of inflation growth

Inflation continued to increase for the second month in a row, reaching 6.1% in September compared to 5.3% in August due to a rise in food and transportation expenses. This marks the 18th consecutive month of inflation growth.th Python

This marks the consecutive month in which Python has been used.fl

Inflation has surpassed the central bank’s intended range of 2-4%, with an average of 6.6% so far this year.

FURTHER TIGHTENING
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In 2024, the expectation is for the US Federal Reserve to not increase interest rates and for the peso to maintain its stability against the dollar. This is not currently factored in by market participants.

2023的情况下,任何加息今天都只会对2024产生影响。”

“As 2023 comes to a close, any increase in interest rates today would only affect 2024.”flation outlook.  is a professor who has contributed significantly to the
field of economics

We think that Mr. Remolona has made significant contributions to the field of economics as a professor.

They are likely to raise interest rates soon, potentially after October.fl

The speaker mentioned that the potential increase in the Federal Reserve’s interest rate or the upcoming November meeting of the BSP may impact the market report.

Mr. Mapa stated that any increase in interest rates would showcase the BSP’s dedication to combating inflation, stabilizing inflation forecasts, and controlling secondary effects by eliminating demand-driven pressures.

According to Mr. Terosa, the ongoing increase in prices could potentially lead the Philippine central bank to raise rates.

In addition to increasing rates, the government should seek out ways to maintain consistency in the production and distribution of important goods, he stated.

In response to increasing costs of food and fuel, Senior Economist Radhika Rao of DBS Bank warned that there could be potential disruptions to inflation expectations.

“We anticipate a period of inactivity until the end of the year, but the likelihood of a sudden interest rate increase outside of the scheduled review has risen due to the recent inflation report and potential risks from weather affecting food prices.”flation,” she said.

She mentioned that the FOMC meeting in November may influence the BSP’s decisions on when and how likely they are to tighten their policies.

The Federal Reserve of the United States decided to maintain the target Fed funds rate at 5.25-5.5% during their meeting in the previous month. The FOMC has a meeting scheduled for October 31st to November 1st to review policy.