DOMESTIC interest rates can only go higher, experts said on Tuesday.

At the annual shareholders’ meeting of Philippine National Bank (PNB), officials said short-term interest rates are to move up “over the next 12 months.”

Latest comments from the Swiss financial services giant UBS also forecast more tightening from the Bangko Sentral ng Pilipinas (BSP)  which has already hiked its policy rates by 25 basis points early this month.

UBS said another 25-basis-point hike is expected to bring the BSP policy rate to 5.75 percent, when borrowing from and 7.75 percent when lending to banks.

The rates now stand at 5.25 percent and 7.25 percent, respectively.

“We see domestic interest rates leading higher this year. Our treasury operations has taken a short-duration stance,” PNB first senior vice present Ramon Lim said.

Lim heads the bank’s treasury unit whose activities are expected to contribute up to 35 percent of its forecast P2-billion net income this year. Treasury operations involve dealing in currency and securities.

At UBS, its Singapore-based researchers said the BSP, along with the Bank of Thailand, should show a “willingness to tighten policy” to help boost the value of the weakened peso and make ownership of its peso bonds more attractive.

“We believe the message from the investment community is that the Bank of Thailand and the Philippine central bank need to surprise the market consensus with their willingness to tighten monetary policy if investor sentiment were to turn more positive and the weakness in the exchange rate along with bond markets is to be arrested,” UBS said. 

WHILE the International Monetary Fund (IMF) supports Manila’s decision to forgo a balanced budget this year, an IMF mission sent to the Philippines has expressed concern the country’s latest tax reforms may endanger the government’s fiscal targets for 2009.

PNB, Allied Bank stockholders approve merger

SHAREHOLDERS of Philippine National Bank (PNB) and Allied Banking Corp. yesterday approved the banks’ merger, a corporate exercise that may cost as much as P1.3 billion.

WB waits for RP move to tap financing facility

THE World Bank said it is waiting for the Philippine proposal to tap into the bank’s rapid financing facility to address the immediate needs of the people amid rising food and oil prices.

DOMESTIC interest rates can only go higher, experts said on Tuesday.

At the annual shareholders’ meeting of Philippine National Bank (PNB), officials said short-term interest rates are to move up “over the next 12 months.”

THE peso on Tuesday gained against the US dollar by five centavos on central bank intervention.

Traders took the cue by unloading long dollar positions, currency traders said.