<\/p>\n
THE BANGKO SENTRAL ng <\/span>Pilipinas (BSP) will likely remain hawkish, but weak economic <\/span>growth could limit its space to <\/span>curb rising prices via monetary tightening, China Banking Corp.\u2019s (Chinabank) chief economist <\/span>said.<\/p>\n In an interview on Money Talks with Cathy Yang<\/i> on One News on Wednesday, Chinabank Chief Economist Domini S. Velasquez said the central bank has no room to be as aggressive in monetary policy tightening given the weak state of the economy. <\/span><\/p>\n \u201cWe predict the BSP can be hawkish all year long so long as inflation stays elevated, and we don\u2019t see signs of it returning back to inside goal,\u201d she said.<\/p>\n \u201cBut I feel on condition that we have now 2.8% GDP (gross domestic product) growth, considered one of the slowest within the region, the BSP cannot hike the identical way it did within the 2022-2023 mountain climbing cycle. They don\u2019t have that much room,\u201d Ms. Velasquez added.<\/p>\n The central bank began its previous tightening cycle in May 2022 as soaring fuel prices following Russia\u2019s invasion of Ukraine stoked inflation.<\/p>\n Inflation accelerated from 3% before the crisis to as much as 8.7% in January 2023.<\/p>\n During that cycle, the BSP hiked rates by a complete of 450 basis points (bps), bringing the important thing policy rate to six.5% by October 2023.<\/p>\n The Philippine economy grew by 7.6% in 2022 and 5.5% in 2023.<\/p>\n Now, the economy is grappling with a brand new wave of oil shocks compounded by the lingering effects of last yr\u2019s flood control corruption scandal. In the primary quarter, GDP grew by 2.8% \u2014 the weakest pace for the reason that pandemic.<\/p>\n Ms. Velasquez said that if the BSP were to tighten aggressively against this backdrop, the economy may soon fall right into a recession. <\/span><\/p>\n \u201cWhen you hike as much as you probably did before, you\u2019ll see the economy taking place or possibly getting into a recession,\u201d she said. \u201cThey should manage it by way of mountain climbing prudently but not mountain climbing an excessive amount of also.\u201d<\/p>\n A recession refers to a big decline in economic activity spread across the economy, often seen as two consecutive quarters of contraction.<\/p>\n Still, Ms. Velasquez noted that the BSP can deliver one other 25-bp rate increase at its June 18 meeting as inflation is predicted to stay elevated all year long.<\/p>\n If realized, this is able to mark the central bank\u2019s second straight hike, following its 25-bp hike to 4.5% in April to temper inflationary pressures amid threats of broadening spillover effects and disanchoring inflation expectations.<\/p>\n Inflation has settled above the BSP\u2019s 2%-4% goal within the last three months but unexpectedly eased for the primary time in six months to six.8% in May from the over three-year high print of seven.2% in April.<\/p>\n The central bank told Reuters last week it could consider taking stronger measures to steer inflation back to its 3% goal if elevated inflation expectations turn out to be entrenched.<\/p>\n This followed BSP Governor Eli M. Remolona, Jr.\u2019s statement in May that the Monetary Board was considering an off-cycle hike before their scheduled June review.<\/p>\n Based on Chinabank\u2019s forecast, headline inflation could stay below 7% in the approaching months to average 5.7% by yearend and can likely cool further to return to the BSP\u2019s goal at 3.8% in 2027.<\/p>\n These are slower than the BSP\u2019s 6.3% and three.8% estimates for 2026 and 2027.<\/p>\n Ms. Velasquez said elevated inflation this yr can be driven by higher rice costs amid the looming El Ni\u00f1o season, though offset by steadily declining oil prices.<\/p>\n Ms. Velasquez also noted that the peso\u2019s weakness against the dollar is benefiting the country\u2019s exports and business process outsourcing industry, though she warned against sharp depreciation.<\/p>\n \u201cBut within the short term, these industries is not going to adjust, right? So, it\u2019s going to take like a medium-term trend,\u201d she said. \u201cWhat we don\u2019t want is sudden depreciation of the peso which I feel the BSP has actually been monitoring.\u201d<\/span><\/p>\n The Chinabank economist said they’re \u201cvery positive\u201d on the peso\u2019s performance within the months ahead, but their \u201cbest worst-case scenario\u201d sees the local unit hitting P63 to the dollar.<\/p>\n Because the war erupted on Feb. 28, the peso has moved to the P61-per-dollar range.<\/p>\n It averaged P61.441 against the greenback in May, about 1.91% or P1.1497 weaker than P60.2913 in April, in accordance with central bank data.<\/p>\n The BSP has repeatedly said it steps within the foreign exchange market to smoothen out sharp inflationary swings, but not to keep up a selected exchange rate level. \u2014 Katherine K. Chan<\/b><\/p>\n<\/p><\/div>\n <\/p>\n","protected":false},"excerpt":{"rendered":" BW FILE PHOTO THE BANGKO SENTRAL ng Pilipinas (BSP) will likely remain hawkish, but weak economic growth could limit its space to curb rising prices via monetary tightening, China Banking Corp.\u2019s (Chinabank) chief economist said. In an interview on Money Talks with Cathy Yang on One News on Wednesday, Chinabank Chief Economist Domini S. Velasquez […]<\/p>\n","protected":false},"author":1,"featured_media":349087,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[17106,10815,2691,1566,51924],"class_list":["post-349086","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-bsp","tag-cycle","tag-replicate","tag-space","tag-tightening"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts\/349086","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/comments?post=349086"}],"version-history":[{"count":2,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts\/349086\/revisions"}],"predecessor-version":[{"id":349089,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/posts\/349086\/revisions\/349089"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/media\/349087"}],"wp:attachment":[{"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/media?parent=349086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/categories?post=349086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ebiztoday.news\/index.php\/wp-json\/wp\/v2\/tags?post=349086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}