NextGen Day

This May, according to Fitch Solutions, the Bangko Sentral ng Pilipinas (BSP) will raise its key rates by an additional 50 basis points. The company also expects domestic inflation to continue to accelerate and predicts a pause in rate adjustments until the end of 2023.

The Monetary Board (MB), which sets policy for the BSP, increased the key interest rates last week by 50 basis points after noting a further increase in the January 2023 inflation rate to 8.7 percent, a fresh 14-year high and a “surprise” that exceeded predictions of a likely peak in December.

In a note released to journalists on Monday, Fitch Solutions stated, “With continuing persistently strong inflation, we now expect the BSP to continue raising interest rates to a peak of 6.50 percent in H123 (first half of 2023).”

It anticipates further increases in the key interest rate of the central bank, which will be implemented “to contain inflationary pressures.”

Beyond that, however, the BSP will have sufficient justification to maintain rates steady for the rest of 2023 due to stability in global monetary conditions and challenges to economic growth, it said.

The expectation that the BSP will maintain its key interest rates throughout the second half of the year is due to the eventual stabilization of global monetary conditions and the central bank’s decision to refocus its efforts on supporting the economy, which is anticipated to be adversely affected by the long-term persistence of an elevated inflation rate.

According to the data, core inflation, which excludes volatile food and energy prices, increased to 7.4% from 6.9% in January of the previous year.

It attributed the spike to an increase in utility costs brought on by increases in energy costs and the introduction of the rebasing of water rates.

Second-round effects, or the results of greater inflation, such as rises in utility prices and salaries, “will remain a key source of upside price pressure,” the paper continued.

It stated that given the effect of weather-related disruptions on supplies, food inflation is also anticipated to experience significant increases.

As a result, Fitch Solutions increased its estimate of this year’s average inflation from 5.4 percent to 6.5 percent and now anticipates that the annual rate of inflation will average approximately 4 percent every month.

It stated that this forecast is consistent with the BSP’s prediction of an average inflation rate of 6.1 percent this year.

This is much higher than the government’s aim of 2 to 4 percent, although it is anticipated to slow down to within-target levels by 2024, when it will average 3.1 percent.

Save/Share this story with QR CODE

---

Disclaimer

This article is for informational purposes only and does not constitute endorsement of any specific technologies or methodologies and financial advice or endorsement of any specific products or services.

Need to get in touch?

Feel free to Contact NextGenDay.com for comments, suggestions, reviews, or anything else.

---

We appreciate your reading. Simple Ways To Say Thanks & Support Us:
1.) GIVE A TIP. Send a small donation thru Paypal
Your DONATION will be used to fund and maintain NEXTGENDAY.com
Subscribers in the Philippines can make donations to mobile number 0917 906 3081, thru GCash.
3.) BUY or SIGN UP to our AFFILIATE PARTNERS.
4.) Give this news article a THUMBS UP, and Leave a Comment (at Least Five Words).

---

AFFILIATE PARTNERS

World Class Nutritional Supplements - Buy Highest Quality Products, Purest Most Healthy Ingredients, Direct to your Door! Up to 90% OFF.
Join LiveGood Today - A company created to satisfy the world's most demanding leaders and entrepreneurs, with the best compensation plan today.

---