Philippines: Will the central bank pause policy tightening? – ING

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Prakash Sakpal, Economist at ING, suggests that the stage is set for the Philippines’ central bank to keep its policy on hold when it meets next week even though a surprisingly steep drop in inflation in November than expected, to 6.0% from 6.7% in the previous month vs a consensus of 6.3% was a relief for the Bank.

Key Quotes

“The central bank meeting is unlikely to pass as a complete non-event as markets will be focused on the central bank’s assessment of inflation-growth risks for 2019, while the balance of risks remains tilted toward inflation considering current elevated inflation expectations and the second-round effects of the administrative hikes in transport and fuel.”

“Even so, we believe inflation has peaked, and so has the central rate hike cycle, which could even make the central bank ease the policy as early as the second quarter of 2019.”

 

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