BSP to keep interest rates

An official of ING Bank Manila said Tuesday the Bangko Sentral ng Pilipinas will likely keep benchmark interest rates steady until the second quarter of 2015 on easing inflationary pressures.

“Reports in the coming weeks of inflation trending lower increase the likelihood of an extended pause by the BSP.  October inflation is out this Wednesday with a Bloomberg consensus forecast of 4.2 percent, slower than the September inflation rate of 4.4 percent. We expect 4.1 to 4.2 percent October headline inflation…,” ING senior economist Joey Cuyegkeng said.

The Bangko Sentral earlier said inflation in October would likely settle between 3.7 percent and 4.6 percent.  Cuyegkeng said based on the downgrades of BSP’s inflation forecast especially for 2016 from 3 percent to 2.8 percent, inflation risks were easing to the point that risks now were balanced.

“We expect the pause of BSP to extend to 1Q [first quarter] to 2Q [second quarter] 2015,” Cuyegkeng said.

He cited the softening of rice and other food prices and the decline in pump prices of oil products.

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