Moody's thinks PH inflation is “uncomfortably strong”
Moody’s Analytics (MA) [link] said that Philippine inflation is “uncomfortably strong and has likely not peaked”, despite noting that inflation “eased” to 8.6% in February.
MA said that it seems likely that the BSP would raise rates by 25 basis points on Thursday.
Romeo Bernardo, an economist with US-based analytics company, GlobalSource Partners, said that he sees overall 2023 inflation reaching 6.5% (as compared to 5.8% in 2022), driven by the “political dimensions” of the food shortages that have caused prices for basic necessities to rise, and that the projected electricity shortages would likely push power rates up through the hottest months of the year.
Mr. Bernardo also projected that the BSP would raise rates by 25 basis points, but “but cannot rule out another 50bp hike.”
MB BOTTOM-LINE
The BSP’s take is that inflation has already peaked, and that it will either raise by 25bp or pause rate hikes at the meeting this Thursday, while the US-based analysts think that inflation has yet to peak, and that the BSP is likely to announce a 25bp hike with an outside chance at a 50bp hike.
About the only thing that both the BSP and these analysts agree on is that a 25bp hike is the most likely thing.
That said, their disagreements are not all that material. Both the BSP and analysts put the onus on the government to demonstrate the wisdom needed to realize that a large portion of the problem is actually within its scope of control, and to generate the courage to execute on making improvements on the food shortages that have plagued the markets for months.
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