An economist of ING Bank said Monday the higher inflation rate in July may force the Bangko Sentral ng Pilipinas (BSP) to reconsider its planned interest rate cut this month.
“The inflation numbers make it slightly less likely that there will be easing in August. The GDP [gross domestic product [GDP) numbers at the margin may have shifted it back a little bit,” said ING head of research and chief economist for Asia Robert Carnell.
The Philippine economy grew 6.3 percent in the second quarter of 2024, while inflation rate in July climbed to 4.4 percent from 3.7 percent in June.
“The thing that I think makes it more of a coin toss is the volatility of the marking backdrop. We have been through a really very hectic, volatile couple of days,” said Carnell. “I’d probably leave it this month and wait till the markets to be little calmer.”
Carnell said the Philippines peso is also well supported and may not be a main reason for an interest rate cut.
Carnell said the country should also wait how the lower import tariff on rice could affect inflation in the coming months.
“So long as the rice remains roughly where it is, then inflation is gonna fall over the coming months. If the price of rice goes down, inflation will fall over the coming months,” he said.
The Monetary Policy meeting of the BSP is scheduled to meet on Aug. 15, 2024.
