By means of Luisa Maria Jacinta C. Jocson, Reporter
The Bangko Sentral NG The speed cycle of Pilipinas (BSP) will be supported by expectations of inflation that settles well inside Goal this year, analysts said.
“The low inflation print for January indicated that the price pressure was generally benign and manageable, which supports the expectations for inflation to stay in the 2-4% target of the BSP,” Chinabank Research said in a report.
“This should offer space for further interest rate letings through the BSP,” it added.
The Philippine Statistics Authority reported on Wednesday that the headline inflation in January remained stable at 2.9%, within the 2-4% target tape of the Central Bank.
Pantheon Macroeconomy Chief Emerging Asia economist Miguel Chanco expects inflation to make an average of 2.7% this year in the midst of “increasingly clear soil-In official core inflation. ”
“Our revised annual prediction means that the inflation of the headline must remain relatively stable from here, ranging between 2.5% and 3% for the rest of this year, comfortable within the The goal range of BSP, “he added.
The BSP projects inflation to settle at 3.3% this year. It said earlier that inflation will probably “remain anchored for the target range during the policy horizon.”
However, the risks for inflation -for views continue to tend to the advantage, said it. Accounting for risks, inflation can be on average 3.4%this year.
“Looking ahead, while inflation is expected to remain within the BSP target range for 2025, potential risks such as local weather disorders and geopolitical tensions must be closely monitored,” said Manulife Investment Management head of fixed -income Jean O. de Castro.
Chinabank research also said that upward risks for the inflation views are unfavorable again and geopolitical conflicts that would “continue to support a cautious approach to policy dependence.”
Nevertheless, analysts expect the BSP to provide a new rate reduction with its first policy assessment for the year next week (13 February).
“These favorable inflation views, together with the weaker than expected performance of the Filipino economy in both the fourth quarter and the full year 2024, reinforces us that the BSP will probably lower the interest rates with 25 basic points (BPS) at its policy meeting Next week, “said Chinabank.
The gross domestic product (GDP) of the Philippines grew in the fourth quarter with a weaker than expected 5.2%.
This brought the growth from 2024 to 5.6% in 2024, short of the goal of 6.5% of the government.
Bofa Securities Economist for the Philippines Jojo Gonzales said they expect that the central bank will leave the rates with 25 BPS next week.
“However, if inflation remains stubborn in February or March, our expectation for a reduction in policy rates in April can be in danger,” said Mr. Gonzales.
“Our expectation is for an interest rate reduction of 25 BP in February and a reduction of 25 BP in April, while the American Fed remains on hold,” he added.
BSP -Governor Eli M. Remolona, Jr. has said that a rate reduction is still on the table for the meeting next week.
Before 2025, Mr Remolona said that the central bank could cut this year with a total of 50 BPS, because 75 BPS or 100 BPS could be ‘too much’.
The monetary board started its relaxation cycle in August last year and reduced the loan costs with a total of 75 BPS against the end-2024.
Mrs. De Castro said that the start of the monetary relaxation will help support economic growth.
“Moreover, the delayed effects of the monetary relaxation of the 75 BP BSP in the previous year, in addition to expected further rate reductions in 2025, will probably support economic expansion,” she said.
“By promoting a favorable investment environment and maintaining a careful tax and monetary policy, the Filipino economy can work on achieving its growth motifs.”