{"id":18745,"date":"2024-05-14T03:02:07","date_gmt":"2024-05-14T03:02:07","guid":{"rendered":"https:\/\/energybuzz.ph\/staging\/6915\/bsp-seen-to-start-easing-in-3rd-quarter\/"},"modified":"2024-05-14T03:02:07","modified_gmt":"2024-05-14T03:02:07","slug":"bsp-seen-to-start-easing-in-3rd-quarter","status":"publish","type":"post","link":"https:\/\/energybuzz.ph\/staging\/6915\/bsp-seen-to-start-easing-in-3rd-quarter\/","title":{"rendered":"BSP seen to start easing in 3rd quarter"},"content":{"rendered":"
\n

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By Luisa Maria Jacinta C. Jocson, <\/b>Reporter<\/i><\/p>\n

THE BANGKO SENTRAL ng Pilipinas <\/span>(BSP) could begin easing policy as early as the third quarter if inf<\/span>lation continues to stabilize, analysts said.<\/p>\n

\u201cAt the earliest, rate cuts could begin next quarter, which would ease the pressure on households,\u201d Moody\u2019s Analytics said in its weekly highlights report.<\/p>\n

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said inflation might continue to \u201csurprise on the downside before falling sharply by the third quarter.\u201d<\/p>\n

\u201cBy then, we expect BSP to have scope to start easing monetary policy all the more given the signs of a slowing economy after f<\/span>irst-quarter GDP showed a disappointing print of 5.7% year on year,\u201d he said in an e-mailed note on Monday.<\/p>\n

BSP Governor Eli M. Remolona, Jr. has said the central bank will consider rate cuts if inf<\/span>lation can settle f<\/span>irmly at around 3% for several months.<\/p>\n

The Monetary Board is set to have its next policy review on Thursday. A BusinessWorld<\/i> poll showed that 17 of 19 analysts expect the central bank to keep its key rate steady at a 17-year high of 6.5%.<\/span><\/p>\n

In a follow-up e-mail, Moody\u2019s Analytics economist Sarah Tan said the BSP would consider inf<\/span>lation and the peso\u2019s recent performance in its monetary decisions.<\/p>\n

\u201cThere has been good progress made on the inflation front, with the latest print for April settling within BSP\u2019s 2-4% target range for a fifth straight month,\u201d she said.<\/span><\/p>\n

Inflation quickened to 3.8% in April from 3.7% in March. However, it was the f<\/span>ifth straight month that inf<\/span>lation settled within the BSP\u2019s 2-4% target.<\/p>\n

The BSP expects inflation to average 3.8% this year.<\/p>\n

\u201cWhile we expect inflation to slightly bump around the upper limit over the next few months as dry weather associated with the El Ni\u00f1o climate pattern hurts food harvests and disrupts supply, in<\/span>f<\/span>lation will return to the target range by early in the third quarter,\u201d Ms. Tan said.<\/span><\/p>\n

The central bank earlier cautioned that in<\/span>f<\/span>lation could temporarily overshoot the 2-4% target in the next two quarters due to base e<\/span>f<\/span>fects and weather conditions that have hurt agricultural output.<\/span><\/p>\n

The El Ni\u00f1o in the tropical Pacific is seen weakening but \u201chotter and drier conditions\u201d continue to persist, according to the state weather bureau.<\/span><\/p>\n

Farm damage from El Ni\u00f1o had climbed to P6.35 billion as of May 8. Rice was the most affected crop, accounting for 51.93% or P3.3 billion of the total damage. This was followed by corn at P1.94 billion and high-value crops at P1.07 billion.<\/span><\/p>\n

\u201cEl Ni\u00f1o is expected to wane starting in May and we can expect some relief from the heat thereafter, which could also benefit our agriculture sector,\u201d Mr. Mapa said.<\/p>\n

Agricultural production was flat in the first quarter, growing by 0.05% to P428.99 billion amid the dry spell.<\/span><\/p>\n

Mr. Mapa said inflation could sharply decelerate by the third quarter.<\/p>\n

\u201cMarket participants are currently predicting inflation breaching the top end of the BSP\u2019s inflation target of 2-4%. However, if rice prices stay unchanged at roughly P55 per kilo, oil prices sustain their decline and domestic demand stays soft, we could see in<\/span>f<\/span>lation skirt the target and drop sharply as early as August,\u201d he said.<\/span><\/p>\n

Meanwhile, Ms. Tan noted that while the peso has weakened in the past few weeks, it is expected to stabilize next quarter.<\/p>\n

\u201cShould these developments materialize, it will give the BSP con<\/span>f<\/span>idence to trim rates as early as August \u2014 the only Monetary Board meeting in the third quarter,\u201d she added.<\/span><\/p>\n

After Thursday, the Monetary Board\u2019s next two policy meetings are on June 27 and Aug. 15.<\/span><\/p>\n

However, Ms. Tan said rate cuts could be delayed if inflation further accelerates.<\/p>\n

\u201cHowever, there is a chance that monetary easing could be delayed till October should inflation accelerate above the target range for longer than expected, or if the Philippine peso weakens further,\u201d she said.<\/span><\/p>\n

\u201cIn this regard, the BSP will keep an eye on the movements by the US Federal Reserve to ensure stability of the peso,\u201d she added.<\/p>\n

Meanwhile, HSBC economist for ASEAN (Association of Southeast Asian Nations) Aris D. Dacanay said the BSP would likely cut rates by the fourth quarter, after the US Federal Reserve begins easing.<\/p>\n

\u201cThe BSP has the luxury to keep its monetary stance tight while the Fed maintains a more hawkish tone. Liquidity in the system remains intact so there is no urgency to loosen the monetary reins,\u201d he said.<\/span><\/p>\n

Markets were initially anticipating the US central bank to cut rates as early as June, but this has been pushed back to as late as the fourth quarter due to persistent inflation.<\/span><\/p>\n

Mr. Remolona earlier said that while the central bank monitors the Fed, its decisions are independent.<\/p>\n

The US central bank kept its Fed funds rate steady at 5.25-5.5% at the end of its April 30-May 1 meeting.<\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

THE BANGKO SENTRAL ng Pilipinas (BSP) could begin easing policy as early as the third quarter if inflation continues to stabilize, analysts said.<\/div>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[3184,5796,14644,9926,5673,4778,1720],"class_list":["post-18745","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-3rd","tag-bsp","tag-bworldonline","tag-easing","tag-quarter","tag-seen","tag-start"],"yoast_head":"\nBSP seen to start easing in 3rd quarter - Energy Buzz<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/energybuzz.ph\/bsp-seen-to-start-easing-in-3rd-quarter\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BSP seen to start easing in 3rd quarter - 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