Hongkong and Shanghai Banking Corp. said Monday it expects Bangko Sentral ng Pilipinas to maintain the current policy rates in its meeting Thursday, as recent data suggest that current conditions are enough for growth.
“The Bangko Sentral ng Pilipinas will hold its last monetary policy meeting of 2015 on Dec. 17. The decision is scheduled to be released at 4 p.m. HKT, only 13 hours after the long-awaited FOMC decision when both HSBC and the market expect the Fed to raise interest rates from the zero-bound,” HSBC said in a report Monday.
“With such coincidental timing, the BSP is unsurprisingly constrained in terms of its course of action,” it said.
HSBC said there was a little need to tweak policy stance at this point. It said Bangko Sentral had clearly indicated that it was comfortable with its current stance and “we think it is unlikely to make any tweaks until the operational changes pencilled in for the second quarter of 2016 [interest rate corridor],” HSBC said.
It said activity and inflation data released over the past month suggested there was no need for policy changes, while liquidity was more than sufficient to fuel growth.
Inflation accelerated in November to 1.1 percent from the record-low of 0.4 percent in October. This brought the average inflation in the first 11 months to 1.4 percent, below the target range of 2 percent to 4 percent this year.
“As we mentioned last month, inflation likely troughed in October but will stay contained despite some upside risks to food CPI from El Niño. Indeed, food prices jolted 1.0 percent month-on-month in October. But the most recent leg down in oil prices should help keep a lid on things for the foreseeable future,” HSBC said.
The bank said headline CPI was set to undershoot the 2 percent to 4 percent target in 2015 and should stay comfortably within range for 2016.
Bangko Sentral Governor Amando Tetangco Jr. earlier said monetary policy stance remained appropriate at the moment even if inflation accelerated to 1.1 percent in November from 0.4 percent in October.
“As anticipated, inflation had bottomed out in October. With credit and domestic liquidity growth rates also stabilizing, these signal that our stance of policy right now is appropriate,” Tetangco said in a text message.