Moody’s Analytics, a subsidiary of Moody’s Corp., said Monday it expects the Monetary Board of the Bangko Sentral ng Pilipinas to keep the overnight borrowing rate at a record-low of 2 percent this week to support the economy amid the continued onslaught of the COVID-19 pandemic.
Moody’s Analytics said in its Asia Pacific economic preview the central banks of Japan, Indonesia and the Philippines were expected to keep settings on hold this week, “with policy settings firmly in accommodative territory.”
It said “the Philippines and Indonesia continue to battle domestic infection waves that have disrupted their respective recoveries.”
Earlier this month, BSP Governor Benjamin Diokno said the economy showed tentative signs of recovery although the outlook remained uncertain with the lingering impact of the COVID-19 pandemic.
Diokno, in an online briefing, cited the movement of people and the rising purchasing manager’s index in manufacturing. He said “recent indicators of activity suggest that the economy has turned a corner.”
He said the “rising trend of the mobility and purchasing manager’s indices suggested that economic activity continued to gradually rise closer to pre-pandemic levels after the steep decline in 2020.”
Diokno said the BSP had ample monetary policy space and that the current accommodative policy settings represented appropriate stimulus to demand.
He said the accommodative policy settings should be allowed to continue to work their way through the economy to bolster private consumption and investment.
“The BSP’s monetary policy remains oriented towards supporting ongoing economic recovery amid supply-side pressures and the presence of economic slack as well as the downside risks to domestic demand from the impact of the protracted COVID-19 pandemic,” he said.
Economic managers lowered their 2021 GDP growth forecast to a range of 4 percent to 5 percent from the previous estimate of 6 percent to 7 percent, taking into account the latest rounds of lockdowns in Metro Manila and nearby provinces to curb the further spread of the disease.
They retained their growth targets for 2022 at 7 percent to 9 percent percent, and for 2023 and 2024 at 6 percent to 7 percent.
Last year, the BSP cut the policy rate by a total of 200 basis points and reduced the reserve requirement by 200 basis points to 12 percent.
Diokno said any move by monetary authorities whether to tweak or not the current monetary policy settings would always be dependent on the latest economic data, particularly inflation and the gross domestic product.