{"id":180282,"date":"2018-09-06T23:22:59","date_gmt":"2018-09-07T03:22:59","guid":{"rendered":"https:\/\/canadianinquirer.net\/v1\/?p=180282"},"modified":"2018-09-06T23:22:59","modified_gmt":"2018-09-07T03:22:59","slug":"economists-eye-50-bps-hike-bsp-rates-inflation-surges","status":"publish","type":"post","link":"https:\/\/canadianinquirer.net\/v1\/2018\/09\/06\/economists-eye-50-bps-hike-bsp-rates-inflation-surges\/","title":{"rendered":"Economists eye 50-bps hike in BSP rates as inflation surges"},"content":{"rendered":"
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He, thus, stressed that the BSP \u201cneeds to contain run-away inflation expectations and demand pull pressures.\u201d (File Photo<\/a>: Bangko Sentral ng Pilipinas\/Facebook)<\/a><\/figcaption><\/figure>\n

MANILA<\/strong>\u00a0— Several economists are projecting another hike in the Bangko Sentral ng Pilipinas\u2019 (BSP) key rates this September after inflation surged to nine-year high in August 2018 to 6.4 percent.<\/p>\n

In a research note, ING Bank Manila senior economist Joey Cuyegkeng said an \u201caggressive monetary policy action\u201d is again needed even as the central bank has raised key rates by a total of 100 basis points to date.<\/p>\n

This, after the inflation rate last month surpassed all projections, including central bank\u2019s 5.5-6.2 percent band.<\/p>\n

Inflation in August was driven by the faster rate of price increases of food items due to supply-side issues, the alcoholic beverages and tobacco index due to higher sin taxes, and the transport services because of higher prices of oil.<\/p>\n

Cuyegkeng forecasts sustained elevated inflation rate, \u201cwith next month\u2019s inflation rate likely to remain above 6 percent and full-year average inflation at 5.1 percent.\u201d<\/p>\n

These figures are higher than the 2 to 4 inflation percent target set by the government until 2020.<\/p>\n

The economist said that although price pressures are expected to decelerate as government implements various measures to address supply-side issues \u201cthe impact of second-round effects would still have to be reflected in production costs and retail prices.\u201d<\/p>\n

He, thus, stressed that the BSP \u201cneeds to contain run-away inflation expectations and demand pull pressures.\u201d<\/p>\n

\u201cThe chances of another aggressive monetary policy action have increased as inflation has surged. Another 50 basis point policy rate hike at the 27 September meeting is a real possibility,\u201d he added.<\/p>\n

Meantime, Landbank market economist Guian Angelo S. Dumalagan said they are revising their forecast from steady BSP rates until the end of the year to a 50 basis points increase when members of the BSP\u2019s policy-making Monetary Board (MB) meet late this month.<\/p>\n

In a market report, he explained that their earlier expectation for an unchanged policy rates until end-year was due to expectations that inflation will peak in the third quarter and start to decelerate thereon.<\/p>\n

As a result of expected deceleration of inflation, the peso, which has been on a depreciation mode for months now is seen to take a breather and stabilize.<\/p>\n

However, Dumalagan said they need to revise their projection to take into account the inflation report released Wednesday, among others.<\/p>\n

He, on the other hand, noted that a downside risk to their inflation forecast is the \u201cpassage and rapid implementation of the rice-import bill,\u201d which is expected to help ease the hikes in rice inflation.<\/p>\n

ANZ Research, in a study, revised upwards its 25 basis points hike projection to 50 basis points after noting the August 2018 inflation outturn.<\/p>\n

It said the six percent level inflation rate, last seen in 2009, \u201cwill require more policy response given cost-push pressures in the economy.\u201d<\/p>\n

It expects domestic demand to remain strong, the impact of tax reforms to still linger, the peso to remain weak, and global crude oil prices remain high — all of which are seen to bring inflation at elevated levels.<\/p>\n

BSP Governor Nestor A. Espenilla on Wednesday said that since inflation remains driven by supply-side factors, there is a need for \u201cmore decisive non-monetary measures.\u201d<\/p>\n

He, however, said that monetary officials will continue to “look closely at the latest data to re-asses the medium-term inflation path\u201d and \u201cwill weigh the need for further monetary policy action.\u201d<\/p>\n

\u201cIt is most critical at this point to restore inflation back to the target range soonest and securely anchor inflationary expectations,\u201d he added.<\/p>\n","protected":false},"excerpt":{"rendered":"

MANILA\u00a0— Several economists are projecting another hike in the Bangko Sentral ng Pilipinas\u2019 (BSP) key rates this September after inflation …<\/p>\n","protected":false},"author":33,"featured_media":151970,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":["post-180282","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","mauthors-joann-villanueva","mauthors-philippine-news-agency"],"_links":{"self":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts\/180282","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/users\/33"}],"replies":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/comments?post=180282"}],"version-history":[{"count":0,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts\/180282\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/media\/151970"}],"wp:attachment":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/media?parent=180282"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/categories?post=180282"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/tags?post=180282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}