Bangko Sentral Sees Faster Inflation Amid Higher Commodity Prices

The Philippine peso has edged higher after the BSP acknowledged the impact of higher commodity prices, raised its inflation forecasts, and said it was drafting normalisation plans.

• Bangko Sentral ng Pilipinas kept the benchmark interest rate at its all-time low on Thursday, as forecast by virtually all economists, to "safeguard the momentum of economic recovery amid increased uncertainty, even as it continues to develop its plans for the gradual normalization of its extraordinary liquidity measures."
• While the Monetary Board refrained from unexpected policy action, it signalled a sense of discomfort with mounting inflationary pressures. The central bank raised its 2022 inflation forecast to +4.3% Y/Y from +3.7% projected in February, citing "the impact of higher global commodity prices."
• The BSP expressed readiness to "respond to the buildup in inflation pressures that can disanchor inflation expectations," but Governor Diokno stressed that at this point sustaining economic recovery remains a priority, while price pressures can be addressed by non-monetary measures.
• Spot USD/PHP trades -0.088 at PHP52.235, with bears looking for sales past Mar 17 low of PHP52.110 and Mar 10 low of PHP52.045. Bulls keep an eye on Mar 14 high of PHP52.487.
• USD/PHP 1-month NDF last seen -0.060 at PHP52.380. Bears look for a dip through Mar 9 low of PHP51.830, while bulls would be pleased by a jump above Mar 14 high of PHP52.940.