|
THE
policymaking Monetary Board may raise interest rates as
early as next month in a move to curb consumer prices.
Policy
is expected to focus on curbing inflation that in April
soared to the higher end of the central bank’s
projections for next year.
In a
policy note to investors, investment bank UBS said it is
still looking at a 100-basis-points rise in the Bangko
Sentral ng Pilipinas’ (BSP) overnight borrowing rate,
currently at a 5 percent since it was pegged to that
level during a Monetary Board policy meeting last June
5.
UBS said
Philippine monetary officials would need to increase
rates some more despite the slowing of the economy as a
result of higher consumer prices. The country’s gross
domestic product is expected to grow at a moderate pace
of 5.5 percent to 6 percent from last year’s 7.4
percent.
“Inflation expectations in the Philippines are under
pressure from food and oil prices,” according to UBS in
a research note released Friday, and that the consumer
price index, a measure of prices of goods and services,
is now “above the top end of the BSP’s inflation target
range for 2009.”
“The
good news is that this policy response would show that
the BSP is stepping up to the plate with regard to
controlling inflation expectations. Such a policy
response should, in turn, alleviate downside pressure on
the peso and upward pressure on long- term local
currency government bond yields,” it added.
The
country’s inflation rate accelerated to 8.3 percent in
April from a year earlier, the fastest pace since May
2005. |
