THE Bangko Sentral ng Pilipinas may be compelled to resume increasing the benchmark interest rates in 2019 because inflation is expected to remain above the official target range of 2 percent to 4 percent, Fitch Solutions Macro Research, a unit of Fitch Group, said Friday.
The Fitch unit released its assessment a day after the policy-making Monetary Board kept the benchmark interest rates steady at 4.75 percent on Thursday, citing the slowing down of inflation that might continue in the months ahead.
“We maintain our forecast for the BSP to resume its rate hiking cycle by 50 bps to 5.25 percent in 2019, as inflation is likely to remain above trend and the official target. Moreover, global risk aversion is expected to remain a dominant theme amid ongoing US trade tensions with China and the EU, and this is likely to result in further downside volatility on the Philippine peso,” Fitch said.
Fitch agreed that inflationary pressures were likely to be weaker in 2019.
