Home ›› 15 Dec 2021 ›› World Biz
The Philippine central bank is likely to wait until the end of next year before raising interest rates to support an economy still recovering from the ravages of pandemic-induced lockdowns, a Reuters poll of economists showed.
An uneven economic recovery and cooling inflation should provide the Bangko Sentral ng Pilipinas (BSP) the impetus to maintain the status quo on interest rates.
All 22 economists in the December 7-13 survey said the central bank would keep its benchmark interest rate at a record low 2.0 per cent at its Dec. 16 meeting and medians suggested the first rise would not come until the fourth quarter of next year.
It was forecast to add 25 basis points in Q4 2022 and Q1 2023, taking the benchmark rate to 2.5%. In a poll last month, the first increase was penciled in for early 2023.
“I see the BSP sticking to their guns. The fact they are continuing to lend to the National Government within the New Central Bank Act shows the economic recovery is still far from entrenched,” said Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines.
“If signs are clear, then and only then, the BSP will move.”
The economy, one of the fastest-growing in Asia before the coronavirus hit, expanded 7.1 per cent year-over-year in the July-Sept quarter, slower than the 12 per cent expansion in the previous one.
But easing of restrictions is likely to help growth reach the government’s target of 4-5 per cent for this year, far from its pre-pandemic levels.
Last Tuesday, the World Bank raised its 2021 growth forecast for the country’s economy to 5.3 per cent from 4.3 per cent forecast in September.
It expected the economy to expand 5.9 per cent next year and 5.7 per cent in 2023. But it also warned about the risks posed by a new wave of infections.
