The Bangko Sentral ng Pilipinas looks set to raise interest rates for a third straight meeting this week, with stubborn inflation and a weak peso keeping the case for tighter policy alive even as growth softens.
Of 15 economists polled, 11 expect the Monetary Board to deliver a quarter-point hike at its August 27 meeting, which would lift the benchmark rate to 5 percent. That would extend a tightening cycle that began in April and bring the cumulative increase to 75 basis points. The other four expect the board to hold at 4.75 percent.
Jun Neri, lead economist at Bank of the Philippine Islands, is in the majority. He expects a 25-basis-point move, arguing that inflation risks are still tilted upward despite a recent slowdown in price growth. The near-term pressure, he said, is concentrated in food and energy, with unpredictable weather a continuing concern for supply.
The decision sets up a familiar central-bank dilemma. Raising rates leans against inflation and supports the peso, but it also makes borrowing more expensive at a time when the economy has already lost momentum, with second-quarter growth at a 16-year low. Holding steady would ease pressure on growth but risks letting price expectations drift.
The split in the survey, weighted heavily toward another hike, suggests most forecasters think the central bank will prioritise price stability and the currency for now, and worry about growth once inflation is more clearly under control.
