An economist of Standard Charted Bank said Thursday he expects the Bangko Sentral ng Pilipinas to increase its benchmark interest rates by 75 basis points this year.
Economist and foreign exchange analyst Jonathan Koh said the BSP might start cutting rates by 25 bps in August, followed by 25 bps in October and another 25 bps in December.
“I’m expecting 75 basis points of cuts this year,” Koh said during the release of Global and Philippine Outlook report of Standard Chartered.
Koh said that because of the elevated interest rate, the Philippine peso emerged as one of the highest-yielding currencies in the region.
“If they don’t cut [interest rates], you can see peso a bit more supported because it’s a high yielder in the region,” he said.
Standard Charted reduced its inflation forecast in the Philippines to 3.1 percent from 3.5 percent, following the decision of the government to slash the rice import tariffs.
The British bank keeps its 6.0 percent gross domestic product growth forecast for the Philippines this year, which is at the lower bound of the government’s 6 percent to 7 percent target range.
“If you look at the [second-quarter growth of] 6.3 percent, you’re up from 5.8 percent in first quarter. That’s seem strong, but underlying details actually suggested that growth momentum would be actually softer,” said Koh. Ralph Harvey Rirao
