UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting comment on the recent rate hike by the BSP.
Key Takeaways
“As expected, Bangko Sentral ng Pilipinas (BSP) continued to normalise its monetary policy rates today (18 Aug) with an additional 50bps hike. This brings the overnight reverse repurchase (RRP) rate to 3.75%, overnight deposit rate to 3.25%, and lending rate to 4.25%. Today’s interest rate hike marked the fourth back-to-back rate increases with a cumulative 175bps since May.”
“The Monetary Board (MB) judged that further monetary policy action is necessary to anchor inflation expectations and prevent a further breach in the inflation target over the policy horizon. The strong domestic economic growth in 1H22 also gave the central bank the flexibility to act against inflation pressures. It expects the national headline inflation to jump further to 5.4% this year (from its Jun’s estimate of 5.0%, UOB est: 5.0%) before decelerating to 4.0% in 2023 (from Jun’s estimate of 4.2%, UOB est: 4.0%) and 3.2% in 2024 (from Jun’s estimate of 3.3%).”
“Overall, the monetary policy statement and BSP Governor’s comments at the press briefing today indicated that the MB continues to the leave the door open for additional rate hikes. That said, BSP has almost fully unwound its collective 200bps rate cuts in the pandemic year of 2020. Ongoing uncertainties particularly global recession risks into 2023 and a tentative retreat in global oil prices could also lead the central bank to pause its rate hikes soon. Thus, we stick to our call for BSP to hike its policy rates by another 25bps in Sep and thereafter keep the RRP rate at 4.00% through 4Q22 and 2023, unless both global and domestic environments move in unexpected directions.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stabilizes near 1.0550, looks to post weekly gains
EUR/USD continues to fluctuate in a tight channel at around 1.0550 in the American session on Friday as trading action remains subdued with US financial markets heading into the weekend early. The pair looks to end the week in positive territory.
GBP/USD loses traction, retreats below 1.2700
After climbing to its highest level in over two weeks at 1.2750, GBP/USD reverses direction and declines to the 1.2700 area on Friday. In the absence of fundamental drivers, investors refrain from taking large positions. Nevertheless, the pair looks to snap an eight-week losing streak.
Gold pulls away from daily highs, holds near $2,650
Gold retreats from the daily high it set above $2,660 but manages to stay afloat in positive territory at around $2,650, with the benchmark 10-year US Treasury bond yield losing more than 1% on the day. Despite Friday's rebound, XAU/USD is set to register losses for the week.
Bitcoin attempts for the $100K mark
Bitcoin (BTC) price extends its recovery and nears the $100K mark on Friday after facing a healthy correction this week. Ethereum (ETH) and Ripple (XRP) closed above their key resistance levels, indicating a rally in the upcoming days.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.