go through Katherine K. Chen
Bangkok remote NG piliPinas (BSP) may block Further monetary easing in OCtober After inflation rose to a five-month high in August, analysts expect central banks to lower their last rate cuts for the year in December.
Ruben Carlo O. Asuncion, chief economist at Unionbank, said it would be DIFfGiven the rebound in price pressures, BSP’s ICULT could justify another reduction in borrowing costs next month.
“Given the upward surprise of title and core inflation, the October drop looks unlikely,” Mr. Assen said in an email response to the question. “This is the differencefICULT can justify reducing the BSP rate, as both periodic and structural inflation should be tilted upward. ”
Angelo B. Taningco, chief economist at Security Bank, said the monetary committee could be “in light of rising inflationary pressures” in October. “However, we still think of BSP’s fourth 25th benchmark (BP) reduction in the December year,” he said in an email.
August’s title inflation accelerated to 1.5% from 0.9% in July, mainly due to typhoon-driven spikes in vegetable and fish prices. It is faster than market expectations, but slower than 3.3% a year ago.
August’s interest rates fall within the BSP’s forecast of 1-1.8%, but exceed 1.3% in A BusinessWorld A poll of 16 analysts. This also marks the sixth consecutive month that inflation remains below the BSP’s 2-4% target.
Inflation was 1.7% in the first eight months, matching the central bank’s 2025 forecast.
Oikonomia Advisory and Research, Inc. Economist Reinielle Matt M. Erece said the August results will seriously affect BSP’s next policy move.
“Although inflation has been lower than analysts’ expectations in the past few months, August’s reading has exceeded it,” he said in a Viber message. “So we may see a more cautious and calibrated approach to the next opportunity to lower the tax rate.”
Deutsche Bank also noted in a report that inflation risks in the coming months could be suspended in October, although it remains expected Relax in December.
BSP lowered the benchmark interest rate by 25 basis points to 5% on August 28, the third cut since August 2024. In total, the cycle has reduced interest rates by 150 bps in total.
BSP Governor Eli M. Remolona, Jr. Earlier it was shown that there might be a room for adjustment before the end of the year, but stressing that the easing cycle is almost completed.
Emilio S. Neri Jr., chief economist at the Bank of the Philippines, said the central bank’s position reflects concerns about inflation risks next year.
He told Talk to Cathy Yang’s money On one news. “We will rise and may lead to violations.”
“And if we can’t control the expectations of inflation, that could lead to BSPs actually hiking rather than cutting,” he added.
Nevertheless, he said cuts later this year are still possible, especially if global development supports loose policies.
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Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., said the central bank of the Philippines could align its decision with the U.S. Federal Reserve’s next policy relocation and domestic growth data.
“We expect the BSP to wait for more data points on inflation to see the Fed cuts in November and provide guidance to the third quarter GDP (gross domestic product),” he said in a Viber message.
He added that if the Fed resumes easing, domestic growth remains modest, and inflation trends aligned with the target, the BSP may consider lowering another tax rate by the end of the year.
Mr Erece said the labor market and growth conditions could justify another adjustment.
The Monetary Commission will meet on October 9 and December 11 for the last two policy reviews of the year.
Meanwhile, analysts marked an increase in core inflation, a key issue. Core inflation rose from 2.3% in July to 2.7% in August, the highest in eight months.
“Our main surprise is the core inflation rate rise to an eight-month high from our latest issuance,” Miguel Chanco, chief Asian economist at Pantheon macroeconomics, said in a note last week. “It is worth remembering, however, that in the Philippines, core inflation still includes some elements of food and energy prices.”
Mr Mapa said the move was driven by select foods outside the core basket, which were affected by storm damage. “These foods, such as other vegetables, appear to be affected by a series of recent storms, thus forming a supply-side shock inflation attack,” he said.
Despite August growth, core inflation averaged 2.4% from January to August, slower than 3.2% a year ago.
Mr Asuncion said this shows that the company is passing more costs, demand remains firm and BSP is paying close attention.
The central bank expects the full-year inflation rate to remain below target in 2025 and then return within 2-4% by 2026 and 2027. Its 2026 forecast is now 3.3%, while its 2027 forecast is 3.4%.
Pantheon macroeconomics predicts inflation to be 1.8% this year and 3% in 2026, up from the previous 2.6% projection. “We continue to believe that BSP will cut at least 25 basis points by the end of 2025, although it is unlikely that the trigger will be pulled into December again,” Mr Chanco said.
Unionbank also modified its forecast from 1.6% to 1.8%.
