Goldman Sachs expects BSP rate pause

Peso volatility brought about by public protests against government corruption, particularly on “ghost” flood control projects, could prompt the Bangko Sentral ng Pilipinas (BSP) to hold the key lending rate at five percent, according to global investment banking giant Goldman Sachs.

- By DERCO ROSAL

In an Oct. 3 report obtained by Manila Bulletin, Goldman Sachs Economics Research noted that the Philippine peso depreciated by around two percent in September following massive anti-corruption protests on Sept. 21, the day the Martial Law declaration of strongman Ferdinand E. Marcos Sr., the father of President Ferdinand R. Marcos Jr., was commemorated.

The peso weakened against the United States (US) dollar in September, depreciating to the P58:$1 level during the month. The local currency ended September at 58.171 from 57.12 at end-August.

Goldman Sachs said consumer price hikes are also seen reinforcing the case for a BSP hold, given that price movements are gaining momentum. Inflation hit a six-month high of 1.7 percent in September, driven by more expensive oil and higher food prices, especially of vegetables.