It is expected that the slower inflation rate in October will reduce the pressure on the BSP to implement stricter policies.

Written by Keisha B. Ta-asan, a journalist

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According to Pantheon Macroeconomics, the rate of inflation is expected to decrease to 5.3% in October. This would alleviate some of the pressure for the Bangko Sentral ng Pilipinas (BSP) to implement stricter monetary policies.   

The Bank of the Philippine Islands (BPI) has stated that a potential increase in interest rates cannot be dismissed during the Monetary Board’s meeting on November 16, if the October data shows a higher-than-anticipated growth and the Philippine peso continues to lose value against the US dollar.

a note dated Oct. 30, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco and Senior Asia Economist Moorthy Krshnan noted that the Philippines

On October 30, in a memo, Miguel Chanco, Chief Emerging Asia Economist at Pantheon Macroeconomics, and Moorthy Krshnan, Senior Asia Economist, mentioned the Philippines.fl

The inflation rate is expected to potentially reach the target range of 2-4% by the end of the year.

drives a decline in food inflation.”

We anticipate that the inflation rate for October will decrease to 5.3%, compared to September’s four-month high of 6.1%. This is due to the decrease in food inflation caused by the reversal of the previous month’s spike in rice prices.finally fi

The UK-based think tank stated that the report should include all filters used.

Pantheon Macroeconomics predicts that the BSP will not take any actions on interest rates in its last two meetings for this year, due to a decrease in October inflation.

flation proves accurate.”

Our prediction for the interest rate in the end of 2024 remains at 5.5%. This suggests a significant decrease in the rapid increase of interest rates in the region, which may begin as soon as February if our forecast for inflation remains favorable.fl

If the prediction and pessimistic perspective on progress are correct, it stated.   

ff-cycle move. This has brought the cumulative rate hikes to 450 bps since May 2022.   

flation data as well as the peso-dollar exchange rate.

“An inflation print signifi

An increase of more than 6.1% could potentially lead to a rate hike during the upcoming meeting. In addition, the central bank may also contemplate raising rates if the exchange rate surpasses P57 and approaches P58,” he stated.

flation rate for

Today, the Philippine central bank will announce its projected inflation for October, while the country’s statistics agency will release the inflation rate.fl

I received data on November 7th.   

th consecutive month above the Reserve Bank of India’s medium-term target of 4%.

In September, inflation accelerated for the second consecutive month to 6.1%, which is also the 18th consecutive month that it has exceeded the Reserve Bank of India’s medium-term target of 4%.^th consecutive month infl the region to

The rate exceeded the BSP’s target range of 2-4%, resulting in the nine-month average for the region being higher than expected.flation to 6.6%.

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The increase in the cyclical rate was a proactive measure taken before the October release.fl

The forecast is for another increase in inflation due to the continued rise in food and fuel costs.   

2020s.”

If conditions are suitable, we are open to the possibility of raising rates again this quarter. We anticipate another hike in the near future, and then a break from increasing rates until the 2020s.fi

In a written statement, she mentioned the first six months of 2024.   

flation to ease.

aflation forecast to factor in the impact of the ongoing COVID-19 pandemic.

The central bank projects that inflation will reach 5.8% for the entire year of 2023, but will decrease to 3.5% in 2024 and 3.4% in 2025. However, the BSP will be updating its prediction for inflation to account for the effects of the current COVID-19 crisis.flation forecasts on Nov. 16.    

According to Mr. Neri from BPI, market participants should not underestimate the e.ffectiveness of a rate hike in taming inflation.   

“Even though inflation is primarily caused by supply, monetary policy still plays a role in managing it. Inflation triggered by supply could potentially result in secondary effects.” ff

“The BSP is striving to combat inflation through its implementation of rate increases,” he stated.   

edpendent central bank is grounded on its ability to deliver low and stable inflation

The BSP’s reputation as an unbiased central bank is based on its success in maintaining low and consistent levels of inflation.fl

The decision of the central bank to target inflation is one of the factors that led to the need for a rate increase, even though the increase in consumer prices is primarily caused by problems in the supply.   

inflation under control”

The BSP’s decision to increase rates signals their determination to manage and reduce inflation.flation back to its target. Infl

The market’s expectations could increase even more in the absence of any action from the BSP, possibly damaging the BSP’s credibility and making it more difficult for them.ffi the

Difficult to defeat or overcome.fl

“The statement was made by Mr. Neri,” expressed the speaker.   

The author observed that the peso may still decrease in value compared to the US dollar, even with the rate increase, as traders take into account significant imports and the global market.financial market developments, and the central banks’ future policy moves.

The author mentioned that holiday remittances could help ease the strain, but the future fluctuations of the domestic currency in 2023 will primarily be influenced by the actions of the US Federal Reserve.   

“After the Fed finishes raising rates, there is a possibility that the peso will strengthen as the market considers the potential for rate reductions. In the event of a US recession, the Fed may decrease its rates and it is expected that the BSP will also do the same,” he stated.

In the previous month, the US Federal Reserve maintained its policy rates at 5.25-5.5%, marking its highest level in 22 years. Over the course of March 2022 to July 2023, the Fed has increased a total of 525 basis points.   

According to the data from the Bankers Association of the Philippines, the local currency ended at P56.955 per dollar on Friday, showing a slight increase of half a centavo from its previous close of P56.96 on Thursday.   

“According to Mr. Neri, the rise in the value of the Philippine currency may be less significant compared to other currencies due to the country’s ongoing current account deficit, which is expected to continue in 2024.”   

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The deficit was valued at $8.2 billion, which accounted for 4% of the country’s GDP in 2017.first semester.   

The current account deficit is forecasted by the BSP to hit $11.1 billion in the current year, which is equivalent to -2.5% of the GDP.