BSP seen to stand pat on policy rates anew

The Bangko Sentral ng Pilipinas (BSP) is likely to keep interest rates steady today as prices may continue to remain elevated this quarter, but analysts said the central bank may have room to be less hawkish amid easing inflationary pressures.

- KEISHA TA-ASAN

Bank of the Philippine Islands lead economist Jun Neri said the BSP's Monetary Board will likely continue to keep the target reverse repurchase rate at 6.5 percent at this year's second policy-setting meeting scheduled today.

The Monetary Board has not touched the benchmark interest rates since its off-cycle hike of 25 basis points last Oct. 26, 2023. From May 2022 to October last year, the BSP fired off 450 basis points to tame inflation.

"No change expected in the next meeting as risks to inflation remain on the upside," Neri said. "BSP will avoid second-round effects and deanchoring inflation expectations." He said BPI's full-year inflation forecast this year is at 3.8 percent, lower than the six percent average in 2023. However, monthly headline inflation may rise to above four percent in the second quarter.

Headline inflation accelerated for the second straight month in March, rising to 3.7 percent in March from 3.4 percent in February. From January to March, inflation averaged 3.3 percent, within the government's target range of two to four percent.