Analysts project BSP policy rate to remain unchanged at 6.25%

Market analysts predict that the Bangko Sentral ng Pilipinas (BSP) will maintain its benchmark interest rate at 6.25 percent, the highest in 16 years, during the upcoming policy meeting on August 17. However, experts differ in their opinions on whether the BSP will continue tightening or if rate cuts are on the horizon.

Goldman Sachs notes that inflation in the Philippines has decreased more quickly than expected this year and is likely to return to the upper end of the BSP’s target range of 4 percent.

The monthly inflation rate has been declining for the past six months, reaching 4.7 percent in July compared to 8.7 percent in January.

Considering these factors, Goldman Sachs expects the BSP to maintain the policy rate this month and for the rest of the year, despite potential upside risks from food inflation. Citi group also shares this view.

ING Bank anticipates a pause in policy tightening but highlights the potential upside risks to the inflation outlook that could influence the BSP to maintain a hawkish stance.

BofA Securities agrees with the expected pause in August but emphasizes that the US Federal Reserve is still likely to raise the US federal funds rate in September, narrowing the spread between the BSP and Fed rates.

With the US policy rate ranging from 5.25

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