HSBC economist eyes 75 bps hike in BSP rates in H1 - TrueID

HSBC economist eyes 75 bps hike in BSP rates in H1

Philippine News AgencyJanuary 11, 2023

HIGHER RATES. Expectations for sustained elevated inflation in the Philippines is projected to be the primary factor of the continued hikes in the Bangko Sentral ng Pilipinas' (BSP) key policy rates. An economist of HSBC forecasts a 75 basis points increase in the central bank's key rates in the first half of 2023. (PNA file photo)

MANILA – An economist of HSBC forecasts a 75 basis points hike in the Bangko Sentral ng Pilipinas’ (BSP) key policy rates within the first half of this year even as the domestic inflation rate is projected to have peaked last December.

In a virtual briefing on Wednesday, HSBC economist for the Association of Southeast Asian Nations (ASEAN) Aris Dacanay said food inflation continues to drive the rate of price increases but core inflation, which excludes volatile food and oil items, accelerated by 6.9 percent year-on-year last December, thus the expectations of additional hikes in the central bank’s key rates.

“We think BSP will hike rates by 25 basis points in each of the next three meetings of the Monetary Board,” he said, referring to the seven-man policy making MB of the BSP.

The MB’s first three meetings this year have been scheduled for Feb. 16, March 23 and May 18.

Last year, the Board hiked the BSP’s key rates by a total of 350 basis points to help address the elevated inflation rate and ensure interest rate differential with the US.

This, as inflation was on the uptrend and breached the government’s 2 to 4 percent target band in April 2022 when it accelerated to 4.9 percent.

Domestic rate of price increases further jumped to 8.1 percent year-on-year last December, from month-ago’s 8 percent, bringing the average for the year to 5.8 percent.

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