Credit rating agency Fitch Ratings recognized the sound monetary policy in the Philippines, which helped inflation slow down.
Fitch cited progress in bringing down inflation, which averaged 3.2 percent in the first 11 months of 2024, compared with 6 percent last year. The agency said this in a credit update report, separate from a rating action press release.
To help bring inflation back within the target range of 2 percent to 4 percent, the Bangko Sentral ng Pilipinas (BSP) raised interest rates three times last year by a total of 100 basis points. The last rate hike was in October 2023, when the BSP made an off-cycle increase of 25 basis points.
Since then, inflation has slowed, settling at 2.5 percent in November. Amid a more favorable inflation environment, the BSP cut interest rates in August and October this year, each by 25 basis points, to support economic growth.
Fitch said it expects Philippine economic growth to accelerate to 5.7 percent this year, further to 5.9 percent next year and 6.2 percent in 2026.
Meanwhile, the BSP said it is enhancing the transmission of monetary policy in part by promoting capital market development.
The BSP collaborated with the banking industry to launch Peso Interest Rate Swaps (Peso IRS). These and other initiatives by the BSP, the government and the banking industry aim to boost trading and liquidity of local bonds and other instruments, making them more accessible to both local and overseas investors.
Fitch’s report follows S&P Global Ratings’ revision of its outlook on the Philippines’ BBB+ rating to positive in November and R&I’s upgrade of the country’s rating to A- in August.
