Negative Rate Signals Philippines Still Behind the Curve

The Philippines stands out as the only country with a negative inflation-adjusted benchmark rate among Asian peers that have raised borrowing costs this year. The second rate increase by its central bank in two months isn’t going to help the beleaguered peso much given the low real yields and current-account deficit, said Mitul Kotecha, a senior emerging markets strategist in Singapore at TD Securities. The monetary authority will likely have to raise interest rates in the months ahead with the next clue coming from the release of inflation data on July 5, he said.