Think tank: No change in BSP rates

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is likely to keep key rates steady at its policy meeting on Thursday, according to UK-based think tank Pantheon Macroeconomics.

“We expect the Monetary Board to keep the target reverse repo rate unchanged at 6.50 percent,” Pantheon Macroeconomics chief emerging Asia economist Miguel Chanco and senior Asia economist Moorthy Krshnan said.

This, as inflation continued to ease in January and the economy posted strong growth in the fourth quarter last year.

Last month, headline inflation further slowed to 2.8 percent from 3.9 percent in December 2023 and 8.7 percent in January last year.

The January inflation is comfortably within the government’s two to four percent target and the lowest since the 2.3 percent in October 2020.

“For now, members are unlikely to see any urgent need to ease policy following the stronger-than-expected Q4 (fourth quarter) GDP (gross domestic product) result,” Chanco and Krshnan said.

The economy grew by 5.6 percent in the fourth quarter of 2023, slower than the six percent expansion posted in the previous quarter and the 7.1 percent growth in the fourth quarter of 2022.

While household spending rose at a faster pace of 5.3 percent in the fourth quarter last year compared to the previous quarter’s 5.1 percent growth, it was slower than the seven percent growth recorded in the fourth quarter of 2022.

For the full year-2023, the economy expanded by 5.6 percent, lower than the 7.6 percent growth in 2022.

It was also below the six to seven percent growth target penned by economic managers via the Development Budget Coordination Committee (DBCC).

Chanco said Krshnan said the resilient job market is helping cushion the moderation in consumption.

In December 2023, the country’s unemployment rate fell to 3.1 percent, the lowest in nearly two decades, from 3.6 percent in November.