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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI BSP Preview - December 2022: 50bps Hike Likely, Keeping Pace With The Fed
EXECUTIVE SUMMARY
- The case for further tightening is a fairly straight forward one. The most recent CPI print was again stronger than expected, rising to 8% y/y for November. This is double the top-end of the BSP’s 2-4% target range and the firmest y/y pace since 2008. Underlying inflation pressures are also broad based and proving sticky, with core inflation continuing to rise.
- BSP Governor Medalla stated, prior to the most recent CPI print, that the board would likely consider a 25bps or 50bps move at the December meeting. Given the upside surprise to the inflation outcome post these comments, coupled with few signs of a sharp deterioration in domestic growth prospects, suggests a 50bps move is the more likely outcome, rather than 25bps. This is firmly what the consensus expects as well.
- The BSP should also take some comfort from the rebound in the Peso FX rate. PHP is still close to 9% weaker YTD, but has rebounded more than 5% versus lows seen in October. A less aggressive move from the BSP at tomorrow’s meeting (say 25bps) could undermine the recent appreciation trend, particularly with the Fed expected to hike rates by 50bps this evening.
- Click to view the full preview here:
BSP Preview - December 2022.pdf
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.