ANZ sees hike in BSP rates in Q3 ’17

MANILA-- Melbourne-headquartered ANZ forecasts a hike in the Bangko Sentral ng Pilipinas' (BSP) key rates in the third quarter of 2017 as demand is seen to push inflation higher.

In a research note issued Thursday, ANZ said it continues to see an increase in the BSP rates despite the central bank's policy-making Monetary Board's (MB) decision to cut inflation forecast for this and next year.

To date, the BSP sees inflation this year averaging at 3.4 percent from 3.5 percent during the Board's rate setting meet last February while next year's forecast was revised to three percent from 3.1 percent.

"While inflation forecasts were marginally lowered for 2017 and 2018, risks are still tilted to the upside," the research note said.

It explained that "even as cost pressures are likely to subside in the second half, demand pull forces will persist."

"This will keep core inflation on an upward trend. We still expect the central bank to start raising the interest rate corridor by Q3," it said.

To date, the BSP's reverse repurchase (RRP) rate is three percent; repurchase (RP) rate at 3.5 percent; and the special deposit account (SDA) rate at 2.5 percent.

Inflation in the first two months this year averaged at three percent, the middle of the central bank's two to four percent target range for this year until 2018.

However, rate of price increases last February alone posted an uptick to 3.3 percent from month-ago's 2.7 percent due to faster inflation rate of the heavily-weighted food and non-alcoholic beverages along with the alcoholic beverages and tobacco; housing, water, electricity, gas and other fuels; transport; and communication.

Source: Philippines News Agency