ING Bank Manila expects the Bangko Sentral ng Pilipinas to consider reversing its policy tightening cycle in May amid the possible slowdown in economic growth due to the delay in budget approval and a tamer inflation.
ING Bank Manila senior economist Nicholas Mapa issued the statement following the latest move of the Monetary Board to keep the benchmark interest rates on Thursday due to the slowdown in inflation rate.
“… Given the supply-side nature of 2018’s inflation spike, we can expect price pressures to dissipate further now that rice tarrification bill is in effect. On the other hand, BSP will also likely be monitoring oil price movements and the possible inflationary impact of El Niño as risks to the inflation outlook,” Mapa said.
On the external front, Mapa said the US Federal Reserve’s abrupt turnaround on rate guidance would also give the BSP added leeway to finally consider reversing its tightening cycle, “all the more with first-half growth seen to be challenged given the protracted budget delay and the ill effect of the present dry spell.”