Philippines Holds Key Rate as Inflation Pressure Persistsby and
All but one of 18 economists forecast rate to be kept at 3%
Inflation held at 3.4% in April, the fastest pace since 2014
The Philippines left its benchmark interest rate at a record low, opting to save its ammunition as inflation pressure persist.
Bangko Sentral ng Pilipinas kept the overnight reverse repurchase rate at 3 percent, it said in Manila on Thursday, as predicted by all but one of 18 economists.
Southeast Asia’s central banks are under pressure to take steps to curb rising prices and economists predict Bangko Sentral will raise rates next quarter, the first in the region. Incoming central bank Governor Nestor Espenilla, who takes over in July, has said policy will remain data dependent.
“Price pressure is rising and we are getting closer to the time for interest rates to be raised,” said Eugenia Victorino, an economist at Australia & New Zealand Banking Group Ltd. in Singapore. “Household spending and private investment are holding up and government spending is robust. With the recovery in exports, growth is running strong on all cylinders.”
Policy makers retained inflation forecasts for this year and next, saying risks include potential tax increases and higher transportation and electricity costs.
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The central bank targets price gains to average 2 percent to 4 percent from 2017 to 2020. Inflation held at 3.4 percent in April, matching the pace in March which was the fastest since 2014.