BSP likely to hold policy rate?

The Bangko Sentral ng Pilipinas does not intend to increase its key policy rate, according to BSP Governor Eli Remolona, but the Monetary Board will still discuss what action it would take during its last policy rate meeting on the 19th of this month even as the BSP chief does not see any need to pump prime the economy for next year as some analysts are suggesting.

- MARIANNE GO

During a yearend dinner with former banking reporters, Gov. Remolona was quite firm that "I think there is very little chance we would raise (policy rates)." In fact, the BSP chief appears to favor holding rates, stating "It's possible it is maintained. It's either maintained or it's a cut, but it will not be more than 25 basis points."

He acknowledged fears that a rate cut could stoke inflation, "it's possible, it's a risk, but we have to weigh all possible indicators."

Several key factors were reported yesterday, Thursday, Dec. 12, that would likely be taken into consideration by the Monetary Board when it deliberates next week. These include the rise in US consumer prices in seven months and the decision of the OPEC (Organization of the Petroleum Exporting Countries) to cut oil demand growth forecasts for this year and next for a fifth straight month, the deepest reduction to the 2024 outlook so far after agreeing to extend its supply curbs.

The OPEC had already reduced its projections for consumption growth this year by 210,000 barrels a day to 1.6 million barrels a day, according to its monthly report. It has slashed its projections by 27 percent since July as it belatedly recognized the deteriorating market picture.

The previous week, the OPEC+ alliance led by Saudi Arabia and Russia had agreed for a third time to delay plans to restart halted crude production while also slowing the pace of increases once they do begin next year. The first in a scheduled series of hikes was postponed to April from January.