Sell-Side Views Post Yesterday's CPI Outcome

J.P. Morgan (albeit with risks tilted towards easing) and Goldman Sachs expect BSP to remain on hold for the remainder of this year. Pantheon see risks of Q4 cuts.

• J.P. Morgan: "BSP to stand pat on policy rate, RRR reduction on the cards next. Barring any supply-side shocks that could illicit a sharp upward revision to the CPI forecasts, we believe the BSP will likely remain on hold this year. Should inflation remain on the downtrend, the risk bias around monetary policy later this year is one tilted towards easing. The pause in monetary policy action could open the door for an operational move of a reduction in the Reserve Requirement Ratio (RRR) in the coming months."
• Goldman Sachs: "Going forward, as inflation pressures ease, we continue to expect BSP to keep its policy rate unchanged for the remainder of the year."
• Pantheon: "Overall, our inflation forecast implies that the headline rate will return to within the BSP’s 2-to-4% target range in September, opening the door for the 50bp-worth of rate cuts we expect in the fourth quarter."