ASEAN KEY DESTINATIONS
Philippines record-low interest rates appropriate
India was the first in the region to raise policy rates by 25-basis points to 6 percent on March 19, followed by Malaysia with a 25 basis points increase to 2.50 percent on May 13.
South Korea called for a 25-basis points hike in its interest rates on July 9, while Thailand tightened rates by 25 basis points to 1.50 percent on July 14.
“Given these multi-speed recovery [across Asian countries] this implies that monetary policy will be tied to country specific circumstances [as] inflation remains favorable,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said.
On August 26, the BSP’s policy-making Monetary Board decided to keep the overnight borrowing or reverse repurchase (RRP) rate at four percent and the overnight lending or repurchase (RP) rate at six percent. The interest rates on term RRPs, RPs and special deposit accounts were also left unchanged.
The central bank has kept the rates at their lowest levels since July 9, 2009.
Tetangco said the board’s decision was based on its assessment that monetary policy settings remain appropriate, given the favorable inflation profile shown by current inflation trends, the inflation outlook and the public’s expectations about inflation.
He indicated that August inflation may have settled within the band of 3.6 percent to 4.5 percent or well within the full year target range of 3.5 percent to 5.5 percent.
Metropolitan Bank and Trust Co. and Bank of the Philippine Islands separately forecast the BSP will start tweaking the rates next year as the economy starts to pick up.
In contrast, Standard Chartered Bank said monetary authorities would call for a 25 basis points hike in the fourth quarter to end this year at 4.25 percent.
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