By Joann Santiago
MANILA, (PNA) — ING Bank does not see any movement in the Bangko Sentral ng Pilipinas’ (BSP) policy rates in the near term given the lesser need to help boost domestic growth as the Philippines trail-blaze in the region as well as inflation remains low.
ING Regional Economist Tim Condon said the achievement by the country of its third investment grade rating is a plus since this ensures continued investment inflows in the domestic economy.
The Philippines now have investment grade ratings from the major debt watcher Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s (S&P).
To date, the BSP’s overnight borrowing or reverse repurchase (RRP) facility is at record-low of 3.5 percent while the overnight lending or repurchase (RP) facility is at 5.5 percent.
Central bank’s policy-making Monetary Board (MB) slashed a total of 100 basis points off these rates from January until October 2012 but left these unchanged to date as the need to provide support to the domestic economy decreases.
Last year, the central bank, which is mandated to ensure price stability and strong financial system that is conducive to growth, reduced policy rates to counter impact of negative external developments to the domestic economy.
In 2012, the economy registered a 6.4 percent growth, as measured by gross domestic product (GDP), one of the highest in the region.
This gave monetary officials leeway not to touch the central bank’s key rates as inflation continue to remain low.
As of September this year, rate of price increases averaged at 2.8 percent, lower than then government’s three to five percent target for this and next year.
Thus, Condon said the investment bank expects the local bourse to regain its recent losses in the last quarter of the year given the continued positive turn-out in the domestic economy and its impact on investors’ confidence.
“We also expect the associated hot money inflows eventually to appreciate the peso,” he said but noted that central bank’s intervention can slow this process.
BSP officials continue to reiterate that market forces continue to determine foreign exchange in the Philippines but central bank officials joins the market only to address extreme volatility.