Governor Eli M. Remolona, Jr. of the Bangko Sentral ng Pilipinas (BSP) stated on Monday that he is willing to have an open discussion.ff
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prior to the Monetary Board’s decision on policy
There will be a meeting on November 16th.
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Analysts told BusinessWorld that the BSP may decide to increase rates by 25 basis points (bps) sooner than November due to inflation.
“I am receptive to a raise outside of the usual cycle,” stated Mr. Remolona during an interview with Bloomberg News in Manila on Monday. He acknowledged that his language has become more forceful since assuming the position.ffi
In July, Remolona expressed openness to a rate hike outside of the usual cycle. For the full story, visit https://www.bworldonline.com/bloomberg/2023/09/26/547814/remolona-open-to-an-off-cycle-rate-hike/.
According to Mr. Remolona, it would be premature to change course and lower the policy rate. fi
The first half of 2024 is being referred to, with the assurance that there will be no easing during that time, and a willingness to stake credibility on this statement.
this case, it’s not a significant slowdown”
To decrease interest rates, there must be a substantial decrease in economic growth. However, in this situation, there is not a significant decline.fl
Mr. Remolona stated that there may be a possibility of falling below the desired range, which is why he believes a rate cut will not occur in the near future.
The Monetary Board maintained the benchmark interest rate at a constant level for the fourth consecutive meeting, remaining at a near 16-year peak of 6.25%. This was also the second meeting led by Mr. Remolona.
its latest outlook report that inflation will remain within its target range
Despite an increase in consumer prices in August, which marked the first rise in seven months, the BSP’s most recent outlook report predicts that inflation will stay within its target range.fl
The goal is to reach the 2-4% target by November.
The forecast for the economy includes potential increases in prices for oil, electricity, and salaries.ff-cycle increase.
Mr. Mapa stated that despite the expectation for inflation to decrease to the desired level by November and Mr. Remolona’s assurance that the peso is not facing excessive stress, he seems inclined to increase rates in response to potential threats to inflation in the future.
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-The possibility of a hike in the cycle rate may arise.ff
The BSP has a well-known reputation as a reputable organization.flation fi
According to Mr. Mapa, the central bank plans to increase interest rates despite lack of significant reasons, citing supply-driven inflation as a driving factor.
It is probable that we will continue to observe increases in rates, but they will have minimal effect on the actual rate.fl
“The governor’s focus on real rates as the primary objective indicates a hawkish stance, with less consideration for the source of inflation or the potential impact of tightening on economic growth,” he stated.
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According to Emilio S. Neri, Jr., Lead Economist at Bank of the Philippine Islands (BPI), increasing the cycle rate could potentially enhance the central bank’s credibility, especially in light of numerous uncertainties in the future. This was expressed in a Viber message.
flation, would force a reversal of the Fed’s current policy.”
If there is a continuous increase in the cost of goods, a sudden increase in the value of the US dollar, or a renewed rise in inflation in the United States, the Federal Reserve would need to change their current approach.flation which could fuel infl
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“Adjust the cycle before November,” he stated.
According to Mr. Neri, if the BSP adopts a more aggressive stance, it will decrease the chances of panic and discourage excessive risk-taking among market participants.
According to Domini S. Velasquez, Chief Economist at China Banking Corp., the BSP may potentially take into account the option of…ff–cycle hike amid recent pressures
The peso is currently in a favorable position compared to the dollar.
verhaul in the exchange rate.”
As we approach the end of the fourth quarter, we anticipate that remittances will lessen the strain on the currency and that there will be no need for a complete overhaul of the exchange rate.ff
Ms. Velasquez stated that there was a “cycle rate hike.”
During the holiday season, remittances tend to increase as migrant Filipinos often send larger amounts of money to their family members. In 2022, cash remittances reached an all-time high of $32.54 billion.
It would be wise to postpone the on-the-record interview and instead wait for the regular policy meeting of the BSP.ff
Ms. Velasquez stated that one should refrain from engaging in market speculation during a cycle hike, unless there is a sudden and unforeseen shock that justifies it.
In the meantime, Mr. Mapa predicts that the Philippine GDP will decrease to 4.8% in the current year and 4.7% in 2024. These estimates fall short of the government’s growth objectives of 6-7% for 2023 and 6.5-8% for the following year.
He also experiences the entire year. fl
The expected inflation rate for this year is predicted to be at 6%, but is projected to decrease to 3.7% in 2024. These estimates are higher than the BSP’s updated forecasts of 5.8% and 3.5%.
It is evident that we must prepare for a prolonged period of increased interest rates and reduced economic growth, as indicated by the new governor who seems to be accepting of this situation. According to Mr. Mapa, raising rates and promoting growth are not compatible. — Keisha B. Ta-asan with Bloomberg