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‘Robust rebound’ forecast for economy in H2
The Philippine economy will likely recover in the second half of the year, driven by an expected rebound in government spending on infrastructure projects and easing inflation, analysts said on Monday. In the July report of The Market Call, economists at First Metro Investment Corp. and the University of Asia and the Pacific said they expect the Philippine economy to have a "robust rebound" in the year's second half. The economists projected full-year GDP growth to expand by 6.1 percent, within the revised government target of 6 to 7 percent target for 2023. However, FMIC and UA&P expect the country's gross domestic product growth to ease to 5.6 percent year-on-year in the second quarter. "Employment remains constructive and should accelerate in (the second half of the year) with National Government and (Public-Private Partnership) spending on infrastructure and rail projects," FMIC and UA&P said. "Investment and consumer spending should flourish as the former counts on a faster pace of infrastructure and transport sector (both NG and PPP) work on ongoing projects," it added. On the other hand, the inflation consensus for July eased further to 4.9 percent from 5.4 percent in June amid El Niño. FMIC and UA&P added that the rapid fall in inflation to within the Bangko Sentral ng Pilipinas' target of 2 percent to 4 percent by the fourth quarter this year and cut in personal income tax should also contribute to stronger consumer spending. "Robust (second half) GDP growth, falling inflation and interest rates should pave good recovery for the third quarter of this year," FMIC and UA&P said. On the other hand, the economists noted that Federal Reserve officials had adopted a more hawkish stance in June in response to persistently intense inflationary pressures and a resilient labor market. For context, the market correctly priced in the 25 basis points rate hike in July, bringing the local 10-year yields to surge as high as 6.7 percent on 10 July. "Markets, however, now hope for a 'Goldilocks soft landing' since U.S. GDP unexpectedly jumped by 2.4 percent in the second quarter (vs. consensus of 2 percent) at the same time that Consumer Price Index inflation fell to 3 percent in June from 4.1 percent a month earlier," FMIC and UA&P said. "However, it returned to the 6.2 to 6.3 percent level later in the month following the softer June U.S. inflation at 3 percent," it added. FMIC and UA&P noted the little upside risk for domestic bond yields, especially in the long end. Hence, they don't also expect the BSP to match the Fed's move. The post ‘Robust rebound’ forecast for economy in H2 appeared first on Daily Tribune......»»
Inflation slowdown prods loans appetite
Economists expect the demand for loans to rise this year as inflation has eased further and prospects of stable interest rates strengthen. Inflation slowed further to 4.7 percent in July from 5.4 percent in June and the peak of 8.7 percent in January due to cheaper prices of food, housing, fuels and utilities, data from the Philippine Statistics Authority revealed. However, prices in restaurants and accommodations increased to 10.1 percent from 9.8 percent in Metro Manila. Growth was likely brought by high demand for food services, which signals strong financial capacities among consumers. “Strong demand from consumers is probably preventing this from falling faster as they continue to spend heavily on these services after the pandemic,” Jun Neri, chief economist of Bank of the Philippine Islands, said. In a text message to the Daily Tribune, BDO Unibank Inc.’s official statement added that “loan demand may be driven more by consumer demand and potential infrastructure projects.” Prices of most goods and services or core inflation, which excludes volatile items like food and gas, fell to 6.7 percent from 7.4 percent. With the possible inflation downtrend, economists said consumers could have more money to spend and commercial banks could charge more manageable costs of borrowing based on the policy rate of Bangko Sentral ng Pilipinas or BSP. “The current path of inflation gives BSP the space to keep rates steady until the end of the year,” Neri said. 2% to 4% inflation BSP aims to pull inflation within the range of 2 percent and 4 percent this year by adjusting its policy rates. Its Monetary Board will announce its next move on 15 August after keeping the rate at 6.25 percent. While BSP often matches the move of the US Federal Reserve, which increased its rate by 0.25 basis point last month, local economists said imposing several hikes this year is unlikely despite possible higher inflation from costlier food prices caused by the recent typhoon and El Nino. Neri said these weather disturbances could reduce food supplies, especially rice and increase their prices through weaker agricultural production and less imports. “El Nino is a global phenomenon that could affect the food production of other countries. India recently announced a ban on the export of non-basmati white rice, while a Thai government agency has encouraged farmers to plant less rice to save on water,” he said. Dan Roces, chief economist of Security Bank Corp., believed a likely small increase in BSP policy rate would be enforced this year as bank executives wait for its full disinflationary effect. “With this, loan rates and demand may still exhibit some growth as monetary policy operates with a lag. A pronounced slowdown in loans, if any, may occur in 2024 should monetary policy remain elevated for long.” Michael Ricafort, chief economist of Rizal Commercial Banking Corp., added that stable rates for this year is possible as long as there will be no major negative turns in the economy. “The markets recently priced in lower odds of another 0.25 Federal Reserve’s rate hike for the rest of 2023, thereby supporting a possible pause on Fed and local policy rates, as supported by inflation moving closer to the inflation target of the central banks for both countries.” The post Inflation slowdown prods loans appetite appeared first on Daily Tribune......»»
Private sector analysts predict inflation rate to dip below 5 percent
Private economists expect the country's inflation rate to ease further for the sixth consecutive month in July from the 5.4 percent inflation rate last June. A Daily Tribune poll of six (6) private sector analysts yielded a median estimate of 4.8 percent for July inflation. The Philippine Statistics Authority (PSA) is expected to unveil inflation data in the first week of August. Economists expect inflation to dip below five percent, marking the first time since April 2022, when the average headline inflation was 4.9 percent. Security Bank chief economist Robert Dan Roces and China Banking Corp. chief economist Domini Velasquez said inflation likely softened to 4.7. In an emailed commentary, Roces elaborated that the deceleration in the consumer price index (CPI) suggests a moderate level of inflation. "The favorable base effects that helped offset the increase in food prices may continue to play a role in keeping inflation in check in the short term," Roces said. For her part, Velasquez said lower utility rates offset higher food and fuel prices. She mentioned that electricity rates in all regions fell substantially from the previous month, especially in Mindanao and Batangas. Velasquez added that a stronger peso in July could have also led to the "muted" monthly inflation rate. ING Bank lead economist Nicolas Mapa, who said that headline inflation averaged 4.8 percent in July, mentioned that Bangko Sentral ng Pilipinas (BSP) would consider the data point alongside the path of inflation against developments such as the recent US Federal Reserve's hike in its subsequent decision. Philippine National Bank economist Alvin Arogo said inflation would likely to 4.9 percent in July amid the month-on-month increase due to the minimum wage hike in Metro Manila and the rise in pump prices due to Dubai crude. Arogo said the favorable base effects will continue to be the main driver for the monthly print of year-on-year price growth to be lower than four percent in the fourth quarter amid the "persistence of second-round effects." Bank of the Philippine Islands (BPI) lead economist June Neri, who said that inflation in July likely eased to 4.9 percent in July, mentioned it would fall within the two to four percent target range of the BSP by the fourth quarter. "Such a print suggests that a sub-four percent monthly print by October or November is possible and increases the chances that the BSP can keep policy rates steady for the balance of 2023," Neri said. Meanwhile, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that the inflation rate for July likely slowed at 5.1 percent as the recent increase in local rice prices would also slow down the easing trend of "disinflation" at the very least. He said that the possible reduction of rice imports by the Philippines would also coincide with the adverse effects of the El Niño drought, especially from the fourth quarter of 2023 to the first quarter of 2024, potentially reducing local rice production. Ricafort added that the weather phenomenon would also lead to some uptick in local rice prices and overall inflation. However, the country's new central bank said it is still too early to declare victory in the battle to curb consumer price pressures as upside pressures on expenses remain high amid downtrend data, the country's new Speaking at a recent banking community event, BSP governor Eli Remolona said the persisting upside risks to inflation indicate the monetary authority remains open to further tightening. The country's core inflation, which primarily excludes food and fuel expenses, hit 7.4 percent in June. Last month's data declined from May's 7.7 percent to April's 7.9 percent. "Nonetheless, it's too soon to declare victory. Core inflation remains high. There are still upside risks to inflation – for example, risks in the form of El Niño and further supply shocks," Remolona said. Remolona stated that the inflation figures will factor into the analysis conducted by the Monetary Board. He added that data will play a crucial role in influencing their policy rate decision. "We will wait and see. We will analyze the data as they arrive, and that analysis will decide monetary policy down the road," the Central Bank chief mentioned. On the sidelines of the same banking event, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said he expects inflation to continue easing in the coming months but warned that there are still risks to the outlook. Balisacan said that the current downward trend in inflation is expected to continue, but some factors could worsen it. These include rising oil prices and the impact of Typhoons Egay and Falcon on agricultural production. "We are still monitoring the situation, but we hope that the impact of the typhoon will not be too serious," Balisacan said. The post Private sector analysts predict inflation rate to dip below 5 percent appeared first on Daily Tribune......»»
Economists bet on one more rate hike
The Bangko Sentral ng Pilipinas is likely to deliver one more rate hike this year after leaving key policy rates untouched last Thursday, economists said......»»
Central banks in no rush to cut interest rates
Investors were hoping to hear central banks finally signal this week that they were close to being done raising interest rates in their battle against inflation. Instead, policymakers indicated that high rates are here for a while yet, with more hikes on the cards and few, if any, cuts in the near future. The US Federal Reserve set the tone on Wednesday when it paused its rate-hike campaign but caused a stir by leaving the door open to another increase before the end of the year. The central bank also unsettled investors by saying that only two cuts were expected next year instead of four as anticipated. The Fed has more room to keep its "hawkish" stance as the US economy has performed better than feared despite the rate increases. This firm position is shared by other central banks. Norway's rate hike Thursday was anticipated, but it also warned further tightening was "likely" in December, while ruling out any easing before next year. Growth or inflation This firm tone came "as a surprise to the markets," which have "decided that the peak" of rate hikes is "happening right now," HSBC economist Fabio Balboni told AFP, even though "central banks' communications leave the door open to the possibility to further hikes". It leaves "real uncertainty about the level of inflation next year", he said. Their decision "reflects a compromise between growth and inflation", he added. The rate hikes raise the cost of credit for businesses and consumers, which theoretically in turn reduces demand and inflationary pressures. But if demand slows too much, it runs the risk of triggering a recession. Faced with this dilemma, the European Central Bank (ECB) chose inflation-limiting measures, with a 10th consecutive rate hike. That took its benchmark rate to 4.0 percent, the highest since 1999. "We can't say we have peaked," ECB president Christine Lagarde said, although other officials indicated that the cycle of raising rates might be coming to a close. "Our future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary," the bank's chief economist Philip Lane said Thursday in New York. Return to lower rates There are other signs, however, that rates are reaching their peak. The Bank of England on Thursday announced its first pause on raising rates since December 2021, following a slight decline in UK inflation in August. Switzerland and Japan -- like half of all central banks -- have also chosen to halt raising rates in the past 10 days. "We expect no more rate hikes in the future" for the US, England and Europe central banks, said Balboni. Jennifer McKeown of Capital Economics said she expected the last hikes to come in the fourth quarter, and that the easing cycle would take hold as 2024 approaches. "By this time next year, we anticipate that 21 out of the world's 30 major central banks will be cutting interest rates," she wrote. Although Balboni, taking a more measured stance, said "in the context of weak growth, it will be very complicated to reduce rates" while inflation remains "too high". Instead, he believes reductions to US rates won't be seen until the third quarter of 2024, while the rest of the world will have to wait until 2025 for rate relief. The post Central banks in no rush to cut interest rates appeared first on Daily Tribune......»»
Pause or hike? ECB rate decision on a knife edge
The European Central Bank is walking a tightrope between still-high inflation and a darkening eurozone outlook as it decides whether to lift interest rates again or finally pause its historic hiking cycle. Whether to raise borrowing costs for a 10th straight time when they meet Thursday is shaping up to be rate-setters trickiest decision since the tightening campaign began. The central bank for the 20 countries that use the euro has already lifted rates by 4.25 percentage points since July last year to combat runaway consumer prices. But the Frankfurt institution now finds itself in a "difficult spot," HSBC said in a note, as officials struggle to digest competing data. On one hand prospects for the single currency area are looking bleaker, particularly due to a poor performance in its biggest economy, Germany, which sank into a recession over the winter and is struggling to climb out of it. Latest data showed eurozone second-quarter growth reached just 0.1 percent, lower than previously estimated, while a recent survey pointed to the economy contracting at its fastest rate in three years as a manufacturing slowdown spread to services. The weak data has fuelled calls for the ECB to pause the aggressive hiking cycle for fear it could deepen a downturn, and President Christine Lagarde finally opened the door to doing so at the bank's last meeting in July. Eye-watering inflation But consumer prices, which began surging after Russia's invasion of Ukraine due to galloping energy costs, continue to rise strongly. This would support arguments for another hike to borrowing costs, with the aim of further depressing demand and slowing inflation. Consumer price rises came in unchanged at 5.3 percent in August, way above the ECB's two percent target, although closely-watched core inflation -- excluding volatile energy and food prices -- eased a little. While inflation has slowed since last year as energy costs fall, officials are now worried that other factors, particularly wage increases in a tight labor market, are keeping it elevated. The data makes for a "very complicated mixed bag," said ING economist Carsten Brzeski. "We expect a very heated debate with a close outcome." Brzeski said he expected the 26-member governing council to opt for one final increase, which would take the closely-watched deposit rate to a record high. Other analysts, however, are betting on a pause on Thursday, although they also think the ECB might then impose one final hike at a later meeting. This would be similar to what the US Federal Reserve has done -- taking a break in June before resuming lifting rates again in July. The Fed and the Bank of England are due to hold their next meetings the week after the ECB. Hawks versus doves ECB officials have insisted their decision will depend on incoming data, which has put the focus on updated forecasts the central bank is also due to release on Thursday. In the run-up to the meeting, they have mostly been cagey about what will happen, a contrast to other recent meetings where the decision was usually well-telegraphed in advance. And mixed signals have emerged in recent days. Governing council member Peter Kazimir called for another 25-basis-point hike, with the Slovak central bank chief writing in an op-ed it is "better to be safe than sorry". But another member, Italian central bank boss Ignazio Visco, disagreed with those who think it is better to overdo it, rather than undershoot, while ECB chief economist Philip Lane welcomed signs inflation was easing in some areas. Analysts stressed it was far from clear whether the "hawks", backers of further tightening, or "doves" -- proponents of a pause -- would prevail on Thursday. But if they do choose to lift rates, it will likely be "the final hike in this cycle, with the ECB on hold until at least mid-2024," said Frederik Ducrozet, chief economist at Pictet Wealth Management. The post Pause or hike? ECB rate decision on a knife edge appeared first on Daily Tribune......»»
Economists hike inflation forecasts
Economists have started revising upward their inflation forecasts for this year as the rate of increase in commodity prices quickened to 5.3 percent in August, ending six straight months of easing......»»
Phl inflation hit 5.3% in August
The Philippine inflation rate accelerated in August due to higher prices of rice and fuel, ending a six-month streak of slowdown and making the central bank reevaluate its decision to pause interest rates. Preliminary data released by the Philippine Statistics Authority on Tuesday showed that the country's headline inflation reached 5.3 percent in August, surpassing the 4.7 percent rate recorded in July. The country's headline inflation also called the consumer price index, is above the 5 percent forecast of economists in a DAILY TRIBUNE poll but within the central bank's 4.8 percent to 5.6 percent projection for the month. But the country's core inflation, which excludes the volatile energy costs, eased to 6.1 percent in August from the previous month's 6.7 percent. This brings the average core inflation from January to August 2023 to 7.4 percent. Core inflation was observed at 4.6 percent in August 2022. In a press briefing, National Statistician and PSA Undersecretary Dennis Mapa noted the higher prices of rice, which weigh heavily in the consumer price index. “The acceleration of food inflation in August 2023 was mainly brought about by the higher year-on-year growth rate observed in rice at 8.7 percent from 4.2 percent in July 2023,” Mapa said. In response to rising retail costs and concerns about merchant stockpiling, President Ferdinand Marcos Jr. has limited the price of the basic commodity. The Philippines set rice price caps to control food costs, and they would last as long as the government deemed it necessary. The country's economic planning secretary said that the Philippines, one of the top importers of rice in the world, may drop tariffs on the grain to help lower domestic expenses in response to the unexpected increase in consumer prices in August. The country’s chief economic planner has also called for a review of the existing tariff levels on rice to help lower the cost of this staple for consumers while considering the impact of this intervention on local producers. “To partially counterbalance the rise in global prices and alleviate the impact on consumers and households, we may implement a temporary and calibrated reduction in tariffs,” National Economic and Development Authority Secretary Arsenio Balisacan said in another statement. Meanwhile, food inflation nationwide increased to 8.2 percent in August 2023 from 6.3 percent in July 2023. Food inflation was lower at 6.5 percent in August 2022. PSA said transportation prices increased 0.2 percent during the month after declining 4.7 percent annually in July. For context, the Light Rail Transit Authority raised fares during the month. LRTA increased the single journey ticket minimum fares for both LRT1 and LRT2a to P15 while maximum fares have gone up as high as P35. In August, oil companies raised diesel prices by almost P10 and gasoline by almost P6. ING economist Nicholas Mapa said rice, transport, and electricity costs will determine the inflation path for the next few months. While he expects the BSP to stay on hold, he said in a post on platform X (formerly Twitter) that it "could consider a hike if this becomes a trend." Following the data, the Bangko Sentral ng Pilipinas said in a statement it "stands ready to adjust the monetary policy stance as necessary" to prevent the broadening of price pressures and the emergence of additional second-order effects. The post Phl inflation hit 5.3% in August appeared first on Daily Tribune......»»
Analysts predict inflation rate at around 5.0% for August
The country's inflation rate will remain above the government's 2 to 4 percent target band, said private sector economists who slightly upgraded their price-rise forecasts for August. A DAILY TRIBUNE poll of analysts over the weekend yielded a median estimate of 5.0 percent for August inflation, within the 4.8 to 5.6 percent forecast given by the Bangko Sentral ng Pilipinas (BSP) last Thursday. If the August number matches the poll consensus, the median estimate will be higher than the 4.6 percent print in July 2023 but lower than the 5.4 percent inflation rate in June 2023. The Philippine Statistics Authority is expected to release the August inflation data on Tuesday, 5 September. Bank of the Philippine Islands's lead economist Emilio "Jun" Neri Jr. said higher prices of liquefied petroleum gas (LPG), kerosene, diesel and vegetables likely drove the Consumer Price Index much higher month-on-month. "Lower electricity (and) other food items may offset some of this," Neri said in an email to Daily Tribune. Rizal Commercial Banking Corp. chief economist Michael Ricafort said that the country's higher local palay and rice prices are one of the "main catalysts" for the August inflation print due to weather disturbances in most Southeast Asian countries affecting rice exports. He added that the agriculture damages caused by tropical storms in Northern and Central Luzon likewise affected the prices in the country. Ricafort likewise attributed the higher fuel prices and depreciating Philippine Peso against the US Dollar to the slightly higher inflation rate for August. "However, these are offset by mostly softer economic data in China and other countries, as partly weighed by higher inflation that reduced household spending and higher interest rates that led to higher borrowing costs," Ricafort said in a Viber message. Security Bank's senior assistant vice president and chief economist Robert Dan Roces also shared the same insights with other economists, saying that the primary factors contributing to the slight increase in the August inflation print are fuel and food prices. "Although the current diesel pump price is significantly lower than the P75 per liter average recorded in June of the previous year, food and fuel prices remain the main drivers of inflation. Notably, farm gate prices of other food items decreased in August compared to July," Roces said in an email. Despite these factors, Roces said the retailers may either be reluctant to reduce current prices or the price reduction price may be taking some time. Roces also underscored that the current inflation increase is mainly driven by the price of rice, which has recently surged by up to P10 per kilo. "Looking ahead, we still see that inflation will fall into the Bangko Sentral ng Pilipinas (BSP) target range of 2 percent to 4 percent by the fourth quarter of this year, barring sustained spikes in rice and fuel in the remaining months of 2023," Roces said. China Banking Corp. chief economist Domini Velasquez said core inflation is expected to continue its downtrend to around 6.0 percent in August despite the projected higher headline rate. "If realized, we do not expect BSP to react immediately to the expected inflation print with higher policy rates. Shocks for August were largely supply-side but have not, so far, detailed the inflation path toward the target range in (the fourth quarter). We still expect inflation to fall within the BSP's target by November," Velasquez said. The post Analysts predict inflation rate at around 5.0% for August appeared first on Daily Tribune......»»
Gov’t funds inflation measures with loans
Borrowings of the national government from domestic and foreign sources continued to climb as they exceeded the P1-trillion mark in the first half of the year. The loans were purportedly intended for programs to respond to the impact of high prices, mainly through subsidies to the poor. Economists expect prices of basic commodities to remain high as the holiday season approaches. Most of them agreed that the third quarter is considered a period for stockpiling inventories, while the final three months see hefty holiday spending, which both increase price pressures. Bureau of Treasury data showed that actual gross borrowing hit P1.33 trillion during the January–June period, up by 24.3 percent from P1.07 trillion a year ago. In the first half, the government borrowed three times more from domestic sources at P1.06 trillion, while gross external financing reached P366.44 billion. Domestic borrowings came from retail Treasury bonds worth P283.76 billion and fixed-rate bonds worth P686.15 billion. Foreign debts came from project loans totaling P57.76 billion, program loans of P145.06 billion, and global bonds worth an equivalent of P163.6 billion. In June alone, gross financing reached P158.95 billion, up by 14.65 percent from P138.64 billion for the same month in 2022. Gross domestic borrowings reached P143.92 billion in June 2023, a 49.22-percent increase from P96.45 billion a year ago. Broken down, domestic debts came from P125 billion in fixed-rate Treasury bonds and P18.92 billion in Treasury bills. Meanwhile, external gross borrowings declined by 54.61 percent to P22.57 billion from P49.72 billion in the previous year. This consisted of P2.66 billion in program loans and P19.9 billion in new project loans. Government borrowings are okay as long as they are used for productive purposes, according to a previous statement from the Department of Budget and Management. Budget Secretary Amenah Pangandaman earlier said the government’s debt-to-gross domestic product ratio rose at the height of the pandemic because the government had to take out additional debt to fund the health sector. “There is a deficit because you have insufficient revenues and the balance will come from borrowings. So, it’s all interconnected,” Pangandaman said in a vlog. The Development Budget Coordination Committee, or DBCC, has a target to bring down the debt-to-gross domestic product ratio to less than 60 percent by 2025. The post Gov’t funds inflation measures with loans appeared first on Daily Tribune......»»
Fed rate hikes still likely — economists
Economists expect higher returns from US dollar-denominated bonds as the improving job market overseas signals higher rate from the Federal Reserve this year. “It is very uncertain if the Federal Reserve is already done with its hiking cycle. Additional rate hikes are still possible given the tight labor market in the US and its impact on wages,” Jun Neri, chief economist of Bank of the Philippine Islands, said Thursday. Data from the US government showed an additional 187,000 jobs last month, indicating a livelier business environment and overall economic growth in the US. Recession fears linger The job data came after worries about the recession caused by high inflation and recent layoffs, especially in the technology industry. “Short-term bond yields may stay elevated as central banks continue to fight inflation,” Neri said. Michael Ricafort, chief economist of Rizal Commercial Banking Corp., told the Daily Tribune the growth in the US industrial sector driven by a 5.2 percent expansion in automobiles in July further supports the still elevated rates. “Stronger US industrial production data could support future Federal rate hikes. Most participants also continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” he said. With more job opportunities and income earners, Ricafort agreed with economists that the chances of the US going into a mild recession are now slim. The post Fed rate hikes still likely — economists appeared first on Daily Tribune......»»
Slower Q2 growth as inflation bites
The economy may have slowed further in the second quarter, private economists said, as persistent inflation and higher interest rates continued to affect consumer spending. Forecasts in the survey conducted by Daily Tribune spanned from 5.6 percent to 6.1 percent, yielding a median estimate of 5.9 percent gross domestic product, or GDP, growth from April to June this year. The economy grew by 6.4 percent in the first quarter, the weakest growth rate since the first quarter of 2021, when it contracted by 3.8 percent. This year’s first quarter growth is slower than the 8 percent increase in the same period last year and the 7.1 percent growth in the preceding quarter. The Philippine Statistics Authority is scheduled to report the second quarter GDP growth data on Thursday, 10 August. Security Bank: 6.1% growth Security Bank’s senior assistant vice president and chief economist Robert Dan Roces expects the Philippine economy to grow by 6.1 percent in the second quarter. He added growth may have been driven by the still robust consumer spending and improved exports. “Private investments continued in the second quarter, supporting economic activity, while low government consumption served as a dampener,” Roces said in an emailed commentary. “The downside risks to growth include the risks to sticky inflation, elevated interest rates, and weaker global economic growth,” Roces added. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., who predicted a 6 percent growth, noted the stronger consumer spending and election-related expenditure amid easing pandemic restrictions, but not without flagging the impact of inflation in the second quarter. He also said that the lower individual income tax rates that went into effect earlier this year might have caused the increase in consumer spending. “Lower individual income tax rates starting January 2023 for most income brackets as part of the TRAIN Law, could lead to increased consumer spending, which accounts for at least 75 percent of the economy, and, in turn, lead to faster economic growth,” Ricafort told Daily Tribune in a Viber Message. China Banking Corp. chief economist Domini Velasquez expects a 5.9 percent GDP growth due to some factors, including higher inflation, which could have offset post-pandemic spending, and lukewarm government spending. “We saw substantial increases in infrastructure spending, but both PS and MOOE growth remained lukewarm,” Velasquez said in a Viber message. “There is a need to hasten government spending in identified agencies lagging behind.” Moving forward, Velasquez expects continued moderation in economic activities as elevated policy rates impact business and household spending. In the third quarter of this year, Velasquez expects the country’s economy to grow to around 5.5 percent and full-year growth to average 5.8 percent, just shy of the government’s 6.0 percent low-end target. In a virtual briefing last 19 July, First Metro Investment Corp. and the University of Asia and the Pacific that the Philippine economic growth likely slowed to 5.6 percent in the second quarter. “I do expect a slowdown in the second quarter to 5.6 percent,” UA&P economist Victor Abola said in the virtual briefing. “It’s really the carryover of inflation to the second quarter; even though it’s lower, people are still a bit more reluctant,” he added. While consumption is expected to slow down in the second quarter, Abola expects a rebound in the second half of the year. The post Slower Q2 growth as inflation bites appeared first on Daily Tribune......»»
Growth, typhoon backlash will guide BSP — economists
Economists believed the Bangko Sentral ng Pilipinas, or BSP, might raise its policy rate this month amid prospects of high economic growth in the second quarter and faster inflation in August. “If we see a hot GDP or gross domestic product reading for the second quarter, this could be a precursor to more tightening ahead. We think GDP will come in at 6.1 percent year-on-year for the second quarter, and the BSP doing an insurance hike of 25 basis points to bring policy rate to 6.50 percent,” Dan Roces, chief economist of Security Bank Corp., told the Daily Tribune. The Asian Development Bank forecasted the GDP at 6 percent this year, higher than Indonesia’s 4.8 percent and Malaysia’s 4.7 percent. GDP stood at 6.4 percent in the first quarter this year, while it surged to 7.4 percent in the second quarter last year as the global economies started reopening from the pandemic, hiking demand for various goods and services and the inflation rate to 6.1 percent during that period. Last month, inflation continued slowing to 4.7 percent from 5.4 percent in June due to cheaper food prices. Critical factor Roces said the downtrend will be impeded if food supply turns insufficient due to recent typhoon “Egay” and forces businesses to raise prices in offsetting costs for imports. “There might be higher importation to fill the void in food items as well as construction repair materials which may pressure the Philippine peso,” he said. Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said a likely higher BSP rate will prevent jumps in prices of imports as it would keep the peso from weakening against the US dollar. “A possible local policy rate hike to match the latest US.Federal Reserve hike would aim to maintain healthy interest rates differentials to stabilize the peso exchange rate versus the US dollar, import prices, and overall inflation,” he explained. If this materializes, Roces said inflation will likely dip below 4 percent by October, within the BSP’s target range of 2 percent to 4 percent this year. Ricafort said the peso has been strong which indicates currency resiliency and sound policy decisions by the BSP. “An offsetting positive factor for inflation would be the relatively stronger peso exchange rate versus the US dollar recently, to among the strongest in three months, thereby could somewhat help ease import prices and overall inflation,” he said. The post Growth, typhoon backlash will guide BSP — economists appeared first on Daily Tribune......»»
Phl economic growth may slow in Q2
The Philippine economy may have slowed further in the second quarter of 2023, private economists said, as persistent inflation and higher interest rates continue to affect consumer spending. Forecasts in the survey conducted by Daily Tribune spanned from 5.6 to 6.1 percent, yielding a median estimate of 5.9 percent gross domestic product (GDP) growth from April to June this year. For context, the Philippine economy grew by 6.4 percent in the first quarter, the weakest growth rate since the first quarter of 2021, when it contracted by 3.8 percent. This year's first quarter GDP growth is slower than the 8 percent increase in the same period last year and the 7.1 percent growth in the preceding quarter. The Philippine Statistics Authority (PSA) is scheduled to report the second quarter GDP growth data on Thursday, 10 August. Security Bank's Senior Assistant Vice President (SAVP) and Chief Economist Robert Dan Roces, who expects the Philippine economy to grow by 6.1 percent in the second quarter of 2023, said the growth may have been driven by the still robust consumer spending and improved exports. "Private investments continued in the second quarter, supporting economic activity, while low government consumption served as a dampener," Roces said in an emailed commentary. "The downside risks to growth include the risks to sticky inflation, elevated interest rates, and weaker global economic growth," Roces added. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., who expects a 6.0 percent growth, noted the stronger consumer spending and election-related expenditure amid looser pandemic restrictions, but not without flagging the impact of inflation in the second quarter this year. He also said that the lower individual income tax rates that went into effect earlier this year might have caused the increase in consumer spending. "Lower individual income tax rates starting January 2023 for most income brackets as part of the Train Law, could lead to increased consumer spending, which accounts for at least 75 percent of the economy, and, in turn, lead to faster economic growth," Ricafort told Daily Tribune in a Viber Message. Meanwhile, China Banking Corp. chief economist Domini Velasquez expects a 5.9 percent GDP growth due to some factors, including higher inflation, which could have offset post-pandemic spending, and lukewarm government spending. "We saw substantial increases in infrastructure spending, but both PS and MOOE growth remained lukewarm," Velasquez said in a Viber message. "There is a need to hasten government spending in identified agencies lagging behind." Moving forward, Velasquez expects continued moderation in economic activities as elevated policy rates impact business and household spending. In the third quarter of this year, Velasquez expects the country's economy to grow to around 5.5 percent and full-year growth to average 5.8 percent, just shy of the government's 6.0 percent low-end target. In a virtual briefing last 19 July, First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) that the Philippine economic growth likely slowed to 5.6 percent in the second quarter. "I do expect a slowdown in the second quarter to 5.6 percent," UA&P economist Victor Abola said in the virtual briefing. "It's really the carryover of inflation to the second quarter; even though it's lower, people are still a bit more reluctant," he added. While consumption is expected to slow down in the second quarter, Abola expects a rebound in the second half of the year. The post Phl economic growth may slow in Q2 appeared first on Daily Tribune......»»
Loan demand up this year on slower inflation
Economists see demand for loans increasing this year as inflation has eased further and prospects of stable interest rates strengthen. Inflation slowed further to 4.7 percent in July from 5.4 percent in June and the peak of 8.7 percent in January due to cheaper prices of food, housing, fuels, and utilities, data from the Philippine Statistics Authority revealed Friday. However, prices in restaurants and accommodations increased to 10.1 percent from 9.8 percent in Metro Manila. Economists said the growth was likely brought by high demand for these services, which signals strong financial capacities among consumers. “Strong demand from consumers is probably preventing this from falling faster as they continue to spend heavily on these services after the pandemic,” Jun Neri, chief economist of the Bank of the Philippine Islands, said Friday. In a text message to Daily Tribune, BDO Unibank Inc.’s official statement added that “loan demand may be driven more by consumer demand and potential infrastructure projects.” Prices of most goods and services or core inflation, which excludes volatile items like food and gas, fell to 6.7 percent from 7.4 percent. With the possible inflation downtrend, economists said consumers could have more money to spend and commercial banks could charge more manageable costs of borrowing based on the policy rate of Bangko Sentral ng Pilipinas or BSP. “The current path of inflation gives BSP the space to keep rates steady until the end of the year,” Neri said. BSP aims to pull inflation within the range of 2 percent and 4 percent this year by adjusting its policy rates. Its Monetary Board will announce its next move on 15 August after keeping the rate at 6.25 percent. While BSP often matches the move of the US Federal Reserve, which increased its rate by 0.25 basis point last month, local economists said imposing several hikes this year is unlikely despite possible higher inflation from costlier food prices caused by the recent typhoon and El Nino. Neri said these weather disturbances could reduce food supplies, especially rice and increase their prices through weaker agricultural production and fewer imports. “El Nino is a global phenomenon that could affect the food production of other countries. India recently announced a ban on the export of non-basmati white rice, while a Thai government agency has encouraged farmers to plant less rice to save on water,” he said. Dan Roces, chief economist of Security Bank Corp., believed a likely small increase in the BSP policy rate would be enforced this year as bank executives wait for its full disinflationary effect. “With this, loan rates and demand may still exhibit some growth as monetary policy operates with a lag. A pronounced slowdown in loans, if any, may occur in 2024 should monetary policy remain elevated for long.” Michael Ricafort, chief economist of Rizal Commercial Banking Corp., added that stable rates for this year are possible as long as there will be no major negative turns in the economy. “The markets recently priced in lower odds of another 0.25 Federal Reserve’s rate hike for the rest of 2023, thereby supporting a possible pause on Fed and local policy rates, as supported by inflation moving closer to the inflation target of the central banks for both countries.” The post Loan demand up this year on slower inflation appeared first on Daily Tribune......»»
Policy rate hike possible by Aug
BSP could match any Fed rate decision to maintain healthy interest rate differentials to support the stability of the peso exchange rate, import prices and overall inflation Economists see a possibility the Bangko Sentral ng Pilipinas or BSP will increase rates next month to match a US Federal Reserve’s move to maintain a healthy currency exchange rate and rein in inflation. Dan Roces, chief economist at Security Bank, forecasted an increase of 25 basis points or bps which would bring the current guidance to 6.5 percent. “This may likely occur in August at 25 bps, following an anticipated similar-sized hike by the US Federal Reserve on 26 July,” Roces told the Daily Tribune last Friday. “BSP could match any Fed rate decision to maintain healthy interest rate differentials to support the stability of the peso exchange rate, import prices, and overall inflation,” Michael Ricafort, chief economist of Rizal Commercial Banking Corp., added. Effect on peso stength A higher BSP rate tends to strengthen the peso value against the dollar, making prices of imported goods and services cheaper while discouraging some consumers from borrowing from banks. BSP aims to bring down inflation further from the latest figure of 5.4 percent in June to 2 percent to 4 percent this year. Meanwhile, Roces said the likely higher BSP rate should impact Philippine banks only minimally and enable them to still fulfill their loan, deposit and savings obligations to customers. “The Philippines is in a good position to withstand another rate hike though, with a well-capitalized and liquid banking system and robust private consumption.” Roces said the inflation rate might accelerate again as businesses increase prices to meet even stronger consumer demand for goods and services to be likely driven by higher salaries. “Considering the June inflation print, wage and fare hikes, and the upside risks to the inflation outlook especially in the core, the data suggests that the BSP may consider further policy rate adjustments.” The Regional Tripartite Wages and Productivity Board in the National Capital Region last month approved an additional P40 to the minimum daily wage of workers in this area which will be effective starting 16 July. This came also amid a downtrend in the unemployment rate in the country. Employment situation improves Jobless rate further improved to 4.3 percent in May from 4.5 percent in April, according to the Philippine Statistics Authority. It was the second lowest jobless rate since April 2005. Considering the June inflation print, wage and fare hikes, and the upside risks to the inflation outlook especially in the core, the data suggests that the BSP may consider further policy rate adjustments. Similarly, the US had 497,000 more workers in the private sector last month which was double the forecast among market analysts. Global analysts said this tempts the Federal Reserve to resume raising its rate on 26 July to prevent inflation from rising again as an effect of higher consumer demand for goods and services. The local economists said BSP would consider this and the other aforementioned factors in deciding its own rate on 17 August. The post Policy rate hike possible by Aug appeared first on Daily Tribune......»»
US economy adds 209,000 new jobs as hiring slows
Hiring in the United States slowed in June, the Labor Department said Friday, providing a much-needed signal that the American economy is cooling ahead of another interest rate decision later this month. The figures came in below analysts' expectations, providing some respite for the US Federal Reserve as it mulls a return to interest rate hikes later this month to tackle inflation still well above its long-term target of two percent. The world's biggest economy added 209,000 jobs last month, down from a revised figure of 306,000 in May, the Labor Department said. Meanwhile, the unemployment rate edged down to 3.6 percent, remaining close to historic lows, underscoring the enduring strength of the labor market. The hiring figure came in below the median expectation of 240,000 new jobs in a survey of economists conducted by MarketWatch, while the unemployment rate was in line with predictions. All three major US stock indexes on Wall Street finished the day in the red amid growing expectations of additional interest rate hikes this year "It's a step in the right direction, but we're not near the level that we would need to see to be convinced that the labor market is significantly cooling down," Oxford Economics' lead US economist Oren Klachkin told AFP. Even with job growth easing, average hourly earnings ticked up by 0.4 percent month-over-month, rising by 4.4 percent on an annual basis. "The labor market is still very strong, wages are still rising at a very strong pace, unemployment is still very low, and nonfarm payrolls rose at a pace that is way above what the Fed wants," Klachkin said. Bidenomics in action US President Joe Biden hailed Friday's jobs report as evidence of "Bidenomics in action." "Our economy added more than 200,000 jobs last month -- for a total of 13.2 million jobs since I took office," he said in a White House statement. "That's more jobs added in two and a half years than any president has ever created in a four-year term," he added. June's new jobs came mainly from increases in employment in government, health care, social assistance, and construction, the Labor Department said. "The economy has proven remarkably resilient, with smaller businesses absorbing layoffs at larger firms," KPMG chief economist Diane Swonk wrote in a note to clients. July hike pretty certain Minutes published earlier this week of the Fed's last meeting showed that several members of its rate-setting committee supported another hike in June to tackle high inflation. Ultimately, the Federal Open Market Committee voted to pause the Fed's campaign of 10 consecutive rate increases, indicating that two additional increases would likely be needed before the end of the year to bring inflation back down. Speaking shortly after the jobs report was released on Friday morning, Chicago Fed president Austan Goolsbee suggested the US central bank had more work to do to tame inflation. "Overall the job market is outstanding, and is getting back to a well-balanced, sustainable level," he told CNBC. "The consensus of almost all the FOMC in the statement of projections is that, over this year, we will have one or two more hikes. I haven't seen anything that says that's wrong," he said. Friday's labor data underscores the likelihood the Fed will return to its campaign of interest rate hikes later this month, according to Oxford Economics' Klachkin. "Given where the data stand right now I think that a hike this month is pretty certain, and I would say that there are even risks of more hikes in the second half," he said. "The Fed is expected to raise rates at least another half percent before it pauses," KPMG's Swonk said, adding that a hike in July was "all but a done deal" at this point. Futures traders now assign a probability of more than 90 percent that the Fed will raise its base rate by a quarter percentage point at its next meeting on July 25-26, according to data from CME Group. The post US economy adds 209,000 new jobs as hiring slows appeared first on Daily Tribune......»»
BSP expected to keep interest rates unchanged amid falling inflation — Fitch Solutions
Bangko Sentral ng Pilipinas might keep interest rates on hold for the remainder of the year and to start cutting rates in the first half of 2024, said a unit of Fitch Solutions. BMI, a Fitch Solutions company, said this in an emailed commentary on Monday as BSP kept the overnight reverse repurchase facility rate on hold at 6.25 percent on 22 June. This marks the second consecutive pause in the tightening cycle after the central bank hiked by a cumulative 425 basis points. The research firm cited falling inflation, slowing economic activity, and the end of the US Fed's tightening cycle as reasons for the expected rate cuts. "Given that inflation is falling faster than what we originally anticipated (6.1 percent year-on-year in May), economic activity is starting to soften and the US Fed is nearing the end of its tightening cycle, we now expect the BSP to keep the overnight reverse repurchase facility rate unchanged for the remainder of the year, marking a change from our previous view for an additional hike," the commentary read. "Our view is now in line with consensus, but we flag that interest rate cuts will only materialize in (first half of 2024), alongside other major central banks," it added. Apart from lower inflation, BMI also noted that the end of the Fed’s hiking cycle later this year will also relieve pressure on the Philippines' external sector, which will reduce the need for the BSP to lean towards fresh hikes to defend its currency. While the Philippine peso experienced a sharp depreciation of about 9.0 percent in 2022, BMI noted that the peso has shown general stability thus far in 2023. "Our baseline forecast is for the US Fed to hike by another 25bps in its upcoming meeting in July to 5.50 percent," the commentary said. However, BMI Research warned that there are risks to its outlook. The biggest risk is that the US Fed hike rates more than expected, which could lead to further depreciation of the Philippine Peso. BMI Research also noted that the economic weakness would also become more apparent, setting the stage for the policy rate to be kept on a prolonged hold for the rest of the year. According to BMI, the high-frequency data show that the Philippine external sector is weak. The research firm noted that the country's export growth in April contracted by 20.2 percent year-on-year, deepening from a 9.1 percent decline in March. "We forecast real GDP growth to slow sharply from 7.6 percent in 2022 to 5.9 percent in 2023. This result would be well below the economy's potential and the government’s targeted range of 6.0-7.0 percent," BMI wrote. In the five years preceding the pandemic, the economy grew by an average rate of 6.6 percent annually from 2015-2019. BMI believes the slowdown will be driven by lackluster global demand and the lagged impact of domestic monetary tightening. The post BSP expected to keep interest rates unchanged amid falling inflation — Fitch Solutions appeared first on Daily Tribune......»»
BSP keeps rates unchanged
The Bangko Sentral ng Pilipinas decided to keep interest rates unchanged at 6.25 percent for the second time this year, as it waits for the effects of its previous rate hikes to take hold and slow down inflation. The BSP's Monetary Board made the decision on Thursday, saying that it wanted to see how the recent rate hikes would impact the economy before making any further changes. Most economists polled by Daily Tribune had expected the Bangko Sentral ng Pilipinas to leave its benchmark overnight borrowing rate unchanged at Thursday's meeting as inflation had slowed for a fourth successive month in May. To recall, the BSP has raised interest rates six times since last September in an effort to cool inflation, which has been running above target for most of the year. In a press briefing, Governor Felipe Medalla highlighted the positive trends in inflation and domestic growth, while acknowledging the lingering risks and the need for continued vigilance. "The BSP’s latest baseline projections continue to suggest a gradual return of inflation to the target band of 2-4 percent over the policy horizon,” Medalla said. "Both headline and core inflation decelerated further in May due mainly to slower increases in the prices of food and energy-related items, affirming expectations of a return to the target range by year’s end,” he added. While the positive trends in inflation are promising, Medalla emphasized the potential risks to the outlook. These risks include the potential impact of additional transport fare increases and minimum wage adjustments, persistent supply constraints of key food items, El Niño weather conditions and possible knock-on effects of higher toll rates on agricultural prices. Medalla also highlighted the downside risk of a weaker-than-expected global economic recovery. “Given these considerations, the Monetary Board deems it appropriate to maintain current monetary policy settings to allow the BSP to further assess how inflation and domestic demand have responded to tighter monetary conditions,” he said. ING Bank Manila senior economist Nicholas Antionio Mapa expects some flexibility on the BSP’s part. “Despite the pause, BSP will likely remain open to hiking if data developments warrant a response,” he said in a Viber message. The pause is the BSP’s “best option” right now as “hiking in the dark” at this stage, without much data, could lead to costly outcomes, he added “Data-dependent central banks will always choose to see data before making adjustments to policy,” The latest BSP decision to keep interest rates unchanged could be the last policy move for Medalla, whose term ends on 3 July. President Ferdinand Marcos has yet to reveal whether he will reappoint Medalla or choose another candidate. Economists said the decision of who will be the next BSP governor will likely affect the central bank's policy stance. “Marcos’ choice for governor will likely inform our outlook for BSP’s policy stance, but should Medalla be reappointed, we expect BSP to be on hold for at least two more policy meetings before possibly cutting rates once inflation settles back within target,” Mapa said in a separate interview. The post BSP keeps rates unchanged appeared first on Daily Tribune......»»
Prices trend down after BSP moves
Inflation has trended down for the fourth straight month in May as the economy showed signs of resilience in the face of aggressive interest rate hikes by the Bangko Sentral ng Pilipinas. Inflation in May registered a year-on-year decline to 6.1 percent from 6.6 percent in April due to easing transport and food costs, Philippine Statistics Authority reported on Tuesday. The May 2023 inflation outturn, within the lowest year-on-year inflation rate since July 2022, is within the BSP’s forecast range of 5.8 percent to 6.6 percent and matched the 6.1 percent median estimate in a Daily Tribune poll conducted last week. Last month’s inflation also brings the year-to-date average inflation to 7.5 percent, which is still above the government’s two percent to four percent target band. The stock index closed at 6,479.93 down 41.71 points or 0.64 percent yesterday. “It was a sell on news session in the local market with inflation coming in line, right within market expectations. With little impetus locally, movements were mainly influenced regionally by the news that regulators are contemplating increasing capital requirements for large banks,” Regina Capital Development Corp. managing director Luis Limlingan said. PSA Undersecretary Claire Dennis Mapa said in a briefing the steady slowdown in inflation can be attributed to slower food and transportation inflation. Among the 13 commodity groups, Mapa noted a decrease in the transportation index by 0.5 percent compared to the previous month’s annual increase of 2.6 percent. The heavily-weighted food and non-alcoholic beverages also dragged the overall inflation down, with a lower inflation rate of 7.4 percent from 7.9 percent in April 2023. The third source of deceleration was restaurants and accommodation services, which registered slower inflation at 8.3 percent from 8.6 percent in the previous month. Meanwhile, the annual rate of alcoholic beverages and tobacco index also slowed down to 12.3 percent. Meat inflation moderated as the inflation rate for chicken decreased from 7.7 percent to 5.9 percent, and the inflation rate for beef decreased from 6.1 percent to 5.3 percent. Pork also continued to experience contraction to -1.0 percent from -0.3 percent due to increased import arrivals accompanied by the timely unloading of frozen pork stocks. Meanwhile, the inflation rate for furnishings, household equipment, and regular household maintenance went up from 6.1 percent in April 2023 to 6.2 percent in May 2023. The recreation, sport, and culture inflation rate also increased from 4.7 percent in April 2023 to 4.9 percent in May 2023. Mapa said the latest data indicates a declining inflation rate in the Philippines, with notable contributions from certain factors, such as transportation costs. “The expectations reveal a declining inflation rate based on the data. Some items that significantly contributed to the previous inflation rate are now decreasing, indicating a reversal in their trend, particularly in the transport sector,” Mapa said. “While the overall trend of the inflation rate is declining, seasonal adjustments, like the seasonally adjusted CPI, have also turned positive this month. However, there are still risks, especially concerning certain food items,” he added. No directive yet During the Malacañang press briefing, Trade Secretary Alfredo Pascual said the Inter-agency Committee on Inflation and Market Outlook convened an emergency meeting last Monday to reopen the discussions about the current state of inflation. When asked about any specific orders from President Ferdinand Marcos Jr. regarding the matter, Pascual responded that there were no explicit directives apart from continuing to monitor the situation. “We convened on 7 March when inflation was peaking, but since it has been declining, there were no specific orders apart from continuing to monitor the situation and thinking of ways to reduce inflation. That is our mandate,” Pascual said. When further asked about the measures that the Inter-Agency Task Force implemented to reduce inflation, Pascual said they had been closely examining supply chain constraints as a significant factor. “The solution lies in removing the bottlenecks. We need to ensure that the logistics are available to deliver the harvest to where the demand is,” Pascual said. Meanwhile, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan expressed his confidence that the government can achieve its inflation target this year as NEDA is working closely with concerned government agencies in monitoring the primary drivers of inflation. Finance Secretary Benjamin Diokno, for his part, told the reporters in a Viber message that the new inflation number and the declining trend “give confidence” that inflation would be within the target range of 2.0 to 4.0 percent by September this year. BSP to pause rate hikes House Ways and Means panel chairman Joey Salceda, meanwhile, expected the BSP to pause with raising interest rates in the face of the country’s persistent development in curbing inflation that hurt Filipinos’ pockets last year and earlier this year. “Inflation continues its downward momentum year-on-year and is in line with the BSP’s expectations. So, I expect Governor Medalla and his predecessor to pause the BSP’s interest rate hike regime barring any major changes in rates by the US Federal Reserve,” the economist-lawmaker said, noting that the May inflation data is in line with the central bank’s expectations. However, for ordinary households, he believes that the slowdown of price levels is “rather theoretical” as price levels have remained unchanged on the aggregate on a month-on-month basis. The veteran solon added that the government should keep an eye on the consumers’ continued curtailing spending while stressing the need to sustain efforts to improve food supply, lower logistics costs, and keep the prices of basic services under control. “Core inflation is also still at an elevated 7.7 percent, indicating that food-poor families remain vulnerable to high prices,” according to Salceda. Meanwhile, ING Bank Manila senior economist Nicholas Antonio Mapa expressed concern over second-round effects. However, Mapa expects the headline rate to give BSP more room for the rate hike pause. “Slowing inflation could give BSP space to extend their pause although fresh developments such as a potential Fed rate hike could impact the forward guidance for an extended pause,” he said in a Viber message. The post Prices trend down after BSP moves appeared first on Daily Tribune......»»