Angelo Taningco
Economist, Treasury Group
The Bangko Sentral ng Pilipinas (BSP) Monetary Board has maintained its monetary policy stance by deciding during its 22 June meeting to keep its key interest rates and reserve requirement ratios unchanged. Its monetary policy decision was based on its assessment of inflation being manageable and inflation expectations anchored to its inflation target range of 3.0%± 1 percentage point. In addition, the BSP has revised downward its inflation forecast for 2017 to 3.1% year-on-year (yoy) and kept its 2018 inflation projection of 3.0% yoy. The BSP has stated that the risk to its inflation outlook is tilted to the upside.
Meanwhile, we maintain our 2017 headline inflation forecast of 3.3% yoy, expecting inflation to gain traction at the latter part of the year. Moreover, financial capital outflows may persist amid expectations of further monetary tightening in the United States. Against this backdrop, we continue to expect one interest rate increase for the year, i.e., a 25 basis point hike that could manifest in September.
Figure: Policy Rate & Headline Inflation
(percent)
Source: BSP, Security Bank Treasury Group forecasts
Disclosures Appendix
This material is confidential and intended for suitable counterparties. The data and information provided in this report accurately reflect the personal views of the specialists or were obtained from public sources believed to be reliable. No representation or warranty as to its accuracy or completeness, express or implied is hereby made, and the investor should not rely thereon without making any independent analysis or research on any topic therein. Any opinion or advice expressed herein may change without notice.
This report is not to be taken as an offer to sell or buy securities or any investment. Security Bank Corporation denies any liability that may arise out of any loss or may result in actual, direct or consequential damage from the use or reliance on any material hereof. Reproduction of this material, whether in whole or in part, is strictly prohibited without the prior consent of Security Bank Corporation. Security Bank Corporation, its directors, officers or staff or any of its subsidiary or affiliates may have taken a short or long position in any investments or securities mentioned herein upon the presentation of this report and may buy or sell the investments or securities at any time in the open market or otherwise, either as broker, dealer, principal or agent.
