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MNI BSP Preview - August 2022: Will It Be 25 Or 50?

MNI Point of View:

  • We expect Bangko Sentral ng Pilipinas to raise its key policy rate by 50bp this week in a bid to curb above-target inflation and defend the beleaguered peso. Governor Medalla repeatedly signalled that the decision this week would be between a 25bp or 50bp rate rise.
  • An off-cycle outsized 75bp rate hike delivered last month in reaction to hawkish Fed repricing marked a pivot in the BSP's approach. The central bank abandoned its earlier gradualist approach, putting emphasis on the need to bring prices under control.
  • An unexpected slowdown in Q2 GDP growth should not dissuade the BSP from raising interest rates. Underlying fundamentals remained fairly strong, while the headline print was weighed on by weaker consumption, as rising prices limited households' purchasing power.

Please use the following link to access the full preview: MNI BSP Preview August 2022.pdf

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