Nalin Chutchotitham, Citi economist for the Philippines, said BSP Governor Eli Remolona Jr. has already given a higher-for-longer forward guidance with the likelihood of keeping rates unchanged in the first half of 2024 after resuming the tightening cycle by November this year.
According to Chutchotitham, the Philippines’ weaker external balances are also making the BSP more cautious and hawkish about cutting rates before the US Federal Reserve next year. “We continue to expect the BSP to raise the policy rate to 6.50 percent in the fourth quarter unless the tariff rate on rice is reduced sufficiently to pre-empt any supply shock on rice,” Dacanay said.
He added that the BSP is likely to raise interest rates by 25 basis points in the fourth quarter if domestic rice prices spike again after the price cap is lifted by the end of the month.
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