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MANILA, Philippines – A jumbo interest rate hike remains a possibility despite softer-than-expected inflation in May, with foreign banks saying the Bangko Sentral ng Pilipinas (BSP) cannot afford to let its guard down while price pressures remain elevated.
In a note to clients, Aris Dacanay, senior Association of Southeast Asian Nations economist at HSBC Global Investment Research, said a 50-basis-point (bp) rate hike remained on the table, pointing to a continued acceleration in core inflation, which excludes volatile food and energy items and has climbed above the central bank’s 2-percent to 4-percent target range.
READ: BSP seen set for jumbo 50-bp rate hike to 5%
Still, Dacanay said the moderation in headline inflation last month had eased pressure on the BSP to deliver any emergency tightening measures before its next scheduled policy meeting.
