BSP: Listening to the sirens' song this week?

PHILIPPINES - Report 13 Aug 2024 by Diwa Guinigundo and Wilhelmina Manalac

In our view, the BSP was right in its decision to keep its policy rates steady despite the preponderance of downside risks to inflation at its June 2024 policy meeting. If the BSP had eased monetary policy two months ago, its decision would have been awkward in the face of the 4.4% July inflation.

It is our expectation that the BSP will be patient in keeping its policy rate steady. After all, for the BSP, it is not simply about increasing or decreasing interest rates. The BSP has to likewise continue monitoring and weighing the impact of the exchange rate, long-term yields, short-term yields, and credit growth as well as other potential disturbances in the economy.

We hope the monetary policymakers do not listen to the sirens’ song.

Now read on...

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