Reuters Poll Shows Most Expect BSP On Hold Through 2023

A Reuters poll has found that 19 out of 20 economists expect Bangko Sentral ng Pilipinas (BSP) to leave rates steady at its meeting on Thursday August 17 with one expecting a hike. The overnight borrowing rate should remain at 6.25% and the overnight deposit facility rate at 5.75%. Rates are expected to remain here for the rest of the year as the central bank assesses the impact of 425bp of cumulative tightening with core inflation only coming down slowly but the economy contracting in Q2.

• 15 out of 19 analysts expect rates to be on hold for the rest of 2023 but 3 expect a cut and one a hike. 12 out of 17 forecast rates to be cut to 6% or lower by end 2024 and the other 5 expect no change.
• Inflation is well off its peaks but remains elevated with headline at 4.7% y/y in July after 8.7% in January and core at 6.7% after 8% in March. BSP expects inflation to return to target in Q4.
• Q2 GDP in the Philippines fell 0.9% q/q, the first quarterly decline since the Covid-impacted Q2 2020. Growth was 4.5% y/y after 6.4% in Q1.