IF the forecast by Standard Chartered Bank on inflation this year is any indication, prices—not growth—preoccupy the banks’ minds the most.

Standard Chartered’s regional economist and head of global research Simon Wong said late Monday Philippine inflation may surge significantly this year to more than 6 percent from a forecast of only 5 percent.

Wong readjusted his forecast in March when inflation surged forward to 6.4 percent only to soar further in April to 8.3 percent.

In contrast, Wong maintained his economic forecast for the Philippines at 4.1 percent that compares with the government’s forecast range of 6 percent to 6.7 percent.

According to Wong, the path to Philippine economic growth is closely linked to that of the United States, where a slump is expected.

He told a crowd of investors, analysts and the media there was to be “no decoupling from a US recession for the Philippines this year.”

The external sector would lead the economic slowdown, Wong said, as exports to the US would likely drop on weak demand for Philippine goods.

He also said price pressures are likely to spill over to the fiscal sector this year as Manila struggles to shield the poor from the impact of food and oil-price escalation through temporary subsidy schemes.

But as the labor sector is agitating for wage hikes—also as a shield against escalating prices—there are risks over the medium term the government might find it expedient to grant unreasonably high wage increases.

“If the wage hike proves higher than inflation, that will hurt the economy. In the past, the wage increases paralleled the price increases,” he said.

Domestic interest rates will stabilize this year, but the expected recession in the US indicate that monetary authorities may cut their policy rates as a consequence.

There are those who believe the rate at which the Bangko Sentral ng Pilipinas (BSP) borrows from or lends to banks may still be lowered by 25 basis points to 4.75 percent and 6.75 percent, respectively.

However, the seven-man policy-making monetary board of the BSP needs to calibrate that response against a scenario in which second-round inflationary impact could hold hostage an economy that is struggling to grow by at least 6 percent this year.

THE GOVERNMENT may have had enough of accredited government securities dealers that, for the past five months, have displayed a stingy attitude when it comes to their money.

PRICES of goods and services in the Philippines have entered a “turbulent” level and inflation will likely spike up to nine percent before pulling back within the 4-percent to 4.5-percent range.

THE peso closed little changed yesterday on prevailing oil and inflation concerns, currency traders said.

BRITISH lender Standard Chartered Bank is tapping the lending and deposit market of small and medium enterprises, or SMEs, as the sector makes a “big contribution” to the economy.

IF the forecast by Standard Chartered Bank on inflation this year is any indication, prices—not growth—preoccupy the banks’ minds the most.