A Reuters poll predicts the Philippine central bank will raise rates again on Thursday and in September to catch up with its counterparts in managing inflation.
Southeast Asia’s inflation rose to 6.4% in July, which is the highest it has been in almost four years. This caused the central bank to tighten monetary policy.
Read More: The Philippine central bank hastened interest rate rises, ready for additional action.
The Bangko Sentral ng Pilipinas (BSP) followed two moderate quarter-point rate hikes so far in this cycle with a large unannounced 75 basis point hike on July 14.
Nearly 70% of analysts, 11 out of 16, predicted that the BSP would raise its key overnight reverse repurchase facility rate to 3.75% on Aug. 18. Four predicted a 25-basis-point raise, while one predicted no change.
10 of 16 analysts predict another 25 basis point raise in September, bringing rates to 4.00%, where they were before the pandemic.
Read More: Australia’s central bank raises interest rates for the third time in a row, with more to come.
Seven economists predict 4.25 percent by 2022. Six predicted 4.00%, while three guessed 3.75% or below.
“Governor (Felipe) Medalla said a 25 or 50 bp raise is probable in August, and we think higher-than-expected inflation suggests the BSP will take the speedier route,” said Barclays’ Shreya Sodhani (LON:BARC).
“This would be consistent with the BSP’s willingness to do more to get inflation in its target range, as seen by the hefty frontloaded boost in July.”
Since the peso has lost 9% of its value this year, imported inflation has made things worse.
According to a July Reuters poll, inflation won’t fall within the goal range of 2%-4% until mid-2023, in accordance with the central bank’s projection.
Read More: A Reuters poll shows that bearish bets on the peso fell after the Philippine Central Bank said it would only raise rates slowly.
Last month, the central bank governor ruled out another surprise rate change, signalling the next move might be smaller.
Although annual growth fell from 8.2% to 7.4%, it was still the second-fastest in Asia, giving the central bank flexibility to tighten.
Since May, BSP has hiked rates by 125 bps.
