Smarter News Now
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting
No Result
View All Result
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
No Result
View All Result
Smarter News Now
No Result
View All Result
Home Investing News

Elevated inflation may push central bank to further hike rates

by
July 18, 2022
in Investing News
0
Elevated inflation may push central bank to further hike rates
0
SHARES
15
VIEWS
Share on FacebookShare on Twitter
Fuel retailers will roll back the pump prices of petroleum products on Tuesday. — PHILIPPINE STAR/ WALTER BOLLOZOS

RISING INFLATION may prompt the Bangko Sentral ng Pilipinas (BSP) to consider more rate hikes this year, according to Fitch Solutions Country Risk & Research.

At the same time, the central bank should make sure its efforts to tame inflation won’t hurt the Philippines’ post-pandemic recovery, Moody’s Analytics said.

“The central bank is likely to continue tightening to rein in inflation, which will likely stay well above the BSP’s target range throughout the rest of 2022,” Fitch Solutions said in a July 15 report.

The think tank raised its average inflation forecast for the Philippines to 5.6% in 2022 from 5.1% previously. This is above the BSP’s 5% average inflation forecast this year.

Inflation rose by 6.1% year on year in June, the fastest in nearly four years and exceeded the central bank’s 2-4% target band for a third straight month. The inflation rate averaged 4.4% in the first six months.

With inflation to remain elevated, Fitch Solutions said it now expects the BSP to raise rates by another 100 basis points, which will take the benchmark rate to 4.25% by end-2022.

The Bangko Sentral ng Pilipinas (BSP) unexpectedly tightened its monetary policy by 75 basis points (bps) on July 14, bringing the benchmark rate to 3.25%. Rates on the overnight deposit and lending facilities were also hiked by 75 bps to 2.75% and 3.75%, respectively.

“In addition to inflation, an aggressive tightening cycle in the US will put further pressure on the BSP to hike aggressively, in order to preserve financial and currency stability,” Fitch Solutions said, adding that rate hikes would help offset the depreciatory impact of “hot money” outflows.

The US Federal Reserve is widely expected to raise interest rates by 75-100 bps at its July 26-27 meeting, after inflation soared to 9.1% in June.

Meanwhile, Moody’s Analytics Associate Economist Sonia Zhu said they expect another two rounds of rate hikes this year, bringing the key policy rate to above 4%.

“However, hiking interest rates aggressively can be a double-edged sword. On one hand, higher interest rates can take some steam off rebounding domestic demand and cool inflation. On the other side, higher rates risk a hard landing if policy makers overcompensate as households and businesses pull back spending and investments,” Ms. Zhu said in a July 17 note.

“The BSP will need to strike a fine balance, as it will not want to stifle the post-pandemic growth as it seeks to keep inflation under control,” she added.

For Fitch Solutions, the Philippine economy’s “resilience” will give the BSP space to accelerate policy tightening.

The think tank forecasts gross domestic product (GDP) growth for the Philippines at 6.1% this year, below the government’s 6.5-7.5% target.

Moody’s Analytics, on the other hand, is hopeful the Philippine economy will grow by “the low 7% range” this year.

The Philippine Statistics Authority is scheduled to release July inflation data on Aug. 5, and second-quarter GDP data on Aug. 9. — Keisha B. Ta-asan

ShareTweetPin

Related Posts

Stocks decline on profit taking, recession fears
Investing News

Stocks decline on profit taking, recession fears

August 23, 2022
Peso climbs vs dollar as RTB offer starts
Investing News

Peso climbs vs dollar as RTB offer starts

August 23, 2022
PNR cancels bids for 3 projects after finding them ‘non-feasible’
Investing News

PNR cancels bids for 3 projects after finding them ‘non-feasible’

August 23, 2022
Senate grills Rodriguez on approval procedures for sugar import order
Investing News

Senate grills Rodriguez on approval procedures for sugar import order

August 23, 2022
Trade dep’t expecting sugar price monitoring report by Friday
Investing News

Trade dep’t expecting sugar price monitoring report by Friday

August 23, 2022
Fisherfolk seek halt to reclamation on municipal fisheries
Investing News

Fisherfolk seek halt to reclamation on municipal fisheries

August 23, 2022
Next Post
Economy to sustain recovery — BSP

Economy to sustain recovery — BSP

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Email Address *
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!
 

Recommended

Pro-life is not just opposing abortion, Vatican says after US ruling

Pro-life is not just opposing abortion, Vatican says after US ruling

June 26, 2022
New breed of video sites thrive on misinformation and hate

New breed of video sites thrive on misinformation and hate

August 23, 2022
Shippers urge Palace to stop planned 949% hike in tariffs

Shippers urge Palace to stop planned 949% hike in tariffs

June 6, 2022
Critical and strategic priority policies for economic dynamism

Critical and strategic priority policies for economic dynamism

July 18, 2022
From Game of Thrones to Peaky Blinders — the best slots based on the TV series

From Game of Thrones to Peaky Blinders — the best slots based on the TV series

July 25, 2022
Two in five buy now, pay later shoppers borrow funds to clear the debt

Two in five buy now, pay later shoppers borrow funds to clear the debt

June 8, 2022
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting

Copyright © 2022 SmarterNewsNow.
All Rights Reserved.

Disclaimer: SmarterNewsNow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

No Result
View All Result
  • About Us
  • Contact Us
  • Email Whitelisting
  • Home
  • Privacy Policy
  • Terms & Conditions
  • Thank You

Copyright © 2020 SmarterNewsNow. All Rights Reserved.