Fitch Solutions eyes last BSP rate increase for 2023 in May

With inflation expected to remain elevated in most of 2023, Fitch Solutions Country Risk and Industry Research forecasts another 25 basis points hike in the central bank’s key rates in May, seen as the last for the year.

previous month’s 14-year high of 8.7 percent.

shares or 43% of the total outstanding shares of SPNEC upon the completion of an asset-forshare swap with SPH which would increase its shares to 34.3 billion.

“We are humbled and grateful for this opportunity, and believe that SPNEC now has the final ingredients to realize the value of our developments for the benefit of all stakeholders,” said Leviste, son of Senator Loren Legarda. SPNEC went public in December 2021, focusing mainly as an integrated developer, own-

FMPIC, P10

Last week, the Bangko Sentral ng Pilipinas’ (BSP) policy-making Monetary Board (MB) hiked by 25 basis points the central bank’s key rates to 6.25 percent for the overnight reverse repurchase (RRP) rate, bringing to 425 basis points the total uptick, from the record-low rate of 2 percent in 2020.

In a report released to journalists on Monday, Fitch Solutions sees inflation to return within the government’s 2 to 4 percent target band only in the second half of this year.

“Although the central bank dialed back on the pace of monetary tightening, we still think that the cycle has a little further to run as inflation will remain elevated over the coming months,” it said.

The rate of price increases decelerated to 8.6 percent last February, little changed from the

The report said that since domestic inflation rate remains sticky, “concerns about price stability will spur the BSP towards hiking rates a little further at its next meeting” or on May 18, 2023.

The research arm of Fitch Group said a pause in the central bank’s rate hiking cycle is forecast for the rest of the year as “signs of economic weakness will become increasingly evident in the data.”

It sees economic growth to be around 5.9 percent this year, slower than the 7.6 percent in 2022 and below the government’s 6 to 7 percent assumption for this year.

“We think that the economic slowdown will be driven by lackluster global demand and the lagged impact of domestic monetary tightening,” it added.

The report cited that with the peso still “susceptible to sell-offs in the near term due to a sustained wide currency account deficit”, risks for any hike in the BSP’s key rates is on the upside.