DESPITE its cautious stance, the Bangko Sentral is still likely to fire one policy move for the year.
Singapore-based bank DBS Bank economist Gundy Cahyadi said the central bank will likely tighten once this year only by about 25 basis points in the second half of the year.
For now, however, the central bank will likely remain prudent and adopt a wait-and-see stance amid the volatile global economy.
“Bangko Sentral maintains its cautious approach for now, amid concerns over the global economy. With domestic demand staying robust and continuing to support the overall GDP growth outlook, there is no reason the BSP should turn dovish,” Cahyadi said.
The central bank is set to hold its first policy meeting of the year on Thursday.
Central bank Gov. Amando M. Tetangco Jr., in his statement following the announcement of the country’s January inflation, hinted at looking more into the state of the global economy in crafting the next policy move.
“We will continue to monitor other developments, including hints of even slower global growth, and more volatility in financial and commodity markets to see if the balance of risks is tilting, such that there is need for adjustments in policy stance,” Tetangco said.
Meanwhile, in the inflation front, the central bank governor said that there is no need to adjust policy stance for the sake of the prices of consumer goods and services in the coming week.
“The slower inflation outturn was primarily due to lower utility rates and transport prices among others,” Tetangco said.
“Our view remains to be that monthly inflation will slowly rise to within the target range for 2016 and 2017,” he added.