Peso Inches Higher As BSP See Economic Growth On "Firmer Ground"

Spot USD/PHP holds marginally below neutral levels, with participants digesting yesterday's monetary policy decision from Bangko Sentral ng Pilipinas. The rate sits at PHP49.975, with initial downside focus falling on Nov 15 low of PHP49.775. Conversely, a move through the 50-DMA at PHP50.464 would bring Nov 22 high of PHP50.765 into play.

• USD/PHP 1-month NDF last seen -0.090 at PHP49.990. Bears keep an eye on Nov 12 low of PHP49.820, while bulls look to a rebound above the 50-DMA, which intersects at PHP50.558.
• Bangko Sentral left key monetary policy unchanged but raised their inflation forecasts on Thursday. Policymakers now expect inflation to average at +4.4% Y/Y rather than +4.3% this year, while the 2022 forecast was revised to +3.4% from +3.3%. Gov Diokno said that CPI expectations for 2022 & 2023 are well anchored within the target range, adding that BSP will remain vigilant on second-round effects.
• The Monetary Board acknowledged the risk posed by the Omicron variant but were otherwise upbeat about the economic recovery. They "observed that economic growth now appears to be on firmer ground, supported by the Government’s accelerated vaccination program and calibrated relaxation of quarantine protocols."
• Policymakers concluded that they see "enough scope to keep a patient hand on the BSP’s policy levers owing to a manageable inflation environment," adding that "preserving ongoing monetary policy support at this juncture shall help sustain the economy’s momentum over the next few quarters."