By Joann Santiago
MANILA, Sept. 23 (PNA) — An economist of Standard Chartered Bank does not foresee any movement in the Bangko Sentral ng Pilipinas (BSP) key rates before any increase in the Federal Reserve rates.
In a research note, Standard Chartered Bank Regional Economist for Asia Jeff Ng said he expected the central bank’s policy-making Monetary Board (MB) to keep the BSP’s key rates and the rate of the special deposit account (SDA) facility when it meet Thursday this week.
To date, the central bank’s overnight borrowing or reverse repurchase (RRP) rate is four percent, the overnight lending or repurchase (RP) rate is at six percent and the SDA rate at 2.5 percent.
Ng explained that growth of the domestic economy in the second quarter this year addressed fears for sustained weakness after a slowdown in the first quarter of the year.
Growth, as measured by gross domestic product (GDP), expanded by 5.6 percent from April to June this year.
This was an improvement from the five percent in previous quarter, which was a deceleration from 6.2 percent in the last quarter of 2014.
“Domestic growth remains robust, which does not support the case for rate cuts, in our view,” Ng said.
The economist also said that rate of price increases was projected to increase in the coming months from the current below-target level.
As of last August, inflation averaged at 1.7 percent, way below the two to four percent target of the government for this year to 2018.
Inflation has been below-target since last May after it fell to decades-low 1.6 percent.
“As monetary conditions remain tight, we think the BSP can afford to delay rate hikes. The BSP is likely to gauge the market reaction to the US Fed’s policy rate decision before making a move,” Ng added. (PNA)