Credit rating agency Fitch Ratings recognized the sound monetary policy in curbing inflation in the Philippines.
Inflation, which averaged 6 percent in 2023, slowed down to 3.2 percent in the first eleven months of 2024.
This was attributed to the Bangko Sentral ng Pilipinas’ (BSP) decisive action, including three interest rate hikes totaling 100 basis points last year, culminating in an off-cycle increase in October 2023.
Since then, inflation has eased, settling at 2.5 percent in November this year. Amid a more favorable inflation environment, the BSP cut interest rates in August and October this year, each by 25 basis points, providing support to economic growth.
Fitch said it expects the Philippine economic growth to accelerate to 5.7 percent this year, 5.9 percent next year and 6.2 percent in 2026.
Meantime, the BSP said it is enhancing the transmission of monetary policy in part by promoting capital market development.
The BSP said it collaborated with the banking industry to launch the Peso Interest Rate Swaps (Peso IRS).
These and other initiatives of the BSP, the government and the banking industry aim to boost trading and liquidity of local bonds and other instruments and make them more accessible not just to local but overseas investors as well.
Fitch’s latest report follows S&P’s revision of its outlook on the Philippines BBB+ rating to positive in November and R&I upgrade of the country’s rating to A- in August.
