Governor Diokno Fuels BSP Rate-Hike Bets Ahead Of Today's Decision

Spot USD/PHP has lost ground as onshore markets re-opened, digesting hawkish speak from BSP Governor Diokno's briefing held just ahead of the upcoming monetary policy decision. The pair changes hands -0.045 at PHP52.410, with bears looking for a sell-off towards May 12 low/50-DMA at PHP52.200/52.195. Topside focus falls on key resistance from PHP52.500.

• USD/PHP 1-month NDF last seen -0.080 at PHP52.590. Bears keep an eye on May 11 low of PHP52.260, while bulls look to a clearance of May 9 high of PHP52.250.
• Bangko Sentral ng Pilipinas will deliver its monetary policy decision later today (08:00 BST). Majority of economists expect the first rate lift-off since 2018 as inflation breached the upper end of the central bank's target range, while GDP growth in Q1 provided an upside surprise. Click here to see our preview of the rate decision.
• Our call for a 25bp hike to the policy rate has been reinforced by Governor Diokno's comments on the eve of the policy announcement. The official noted that the space to keep monetary policy settings accommodative has "considerably narrowed." He said that "second round effects are starting to manifest" (a previously flagged threshold for potential interest-rate action) and the BSP "stands ready to act should it see any sign of inflation expectations becoming disanchored."