{"id":19003,"date":"2024-05-31T03:09:51","date_gmt":"2024-05-31T03:09:51","guid":{"rendered":"https:\/\/energybuzz.ph\/staging\/6915\/bsp-needs-to-keep-policy-tighter-than-before-hsbc\/"},"modified":"2024-05-31T03:09:51","modified_gmt":"2024-05-31T03:09:51","slug":"bsp-needs-to-keep-policy-tighter-than-before-hsbc","status":"publish","type":"post","link":"https:\/\/energybuzz.ph\/staging\/6915\/bsp-needs-to-keep-policy-tighter-than-before-hsbc\/","title":{"rendered":"BSP needs to keep policy \u2018tighter than before\u2019 \u2014 HSBC"},"content":{"rendered":"
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THE BANGKO SENTRAL NG <\/span>Pilipinas (BSP) may need to keep rates higher for longer or even hike rates further to cool inf<\/span>lation, HSBC said.<\/p>\n

This as it sees private consumption staying strong and spending patterns shifting as the Philippines inches closer to becoming an upper middle-income economy.<\/p>\n

In a report, HSBC economist for ASEAN (Association of Southeast Asian Nations) Aris D. Dacanay<\/span> said that monetary policy reins may need to be \u201ctighter than before\u201d in order to keep inflation within the 2-4% target band.<\/p>\n

\u201cWith Filipino consumers changing, so, too, should inflation and monetary policy. We can expect core consumer price index (CPI) to be stickier as consumers become wealthier and allocate more of their budgets to services and less to staples,\u201d he said.<\/p>\n

\u201cPolicy makers would then need to tighten the monetary reins even further if inflation were to surge in the future, supporting our view that, when the dust settles, monetary policy in the Philippines will likely be higher for longer,\u201d he added.<\/p>\n

The Monetary Board earlier this month kept its benchmark rate at a 17-year high of 6.5% for a f<\/span>ifth straight meeting.<\/p>\n

BSP Governor Eli M. Remolona, Jr.<\/span> earlier said that it was \u201chighly unlikely\u201d for the central bank to deliver further rate hikes. Instead, he signaled the possibility of a rate cut as early as August.<\/p>\n

While high inf<\/span>lation and interest rates have dampened household consumption, HSBC said the Philippines still remains to be \u201cone of the strongest in ASEAN.\u201d<\/p>\n

\u201cBut, despite household budgets getting tighter, consumers are, interestingly, reallocating their spending from \u2018essentials\u2019 \u2014 such as food and clothing \u2014 to restaurants and other miscellaneous goods services, even as prices have climbed. It\u2019s a bit of a paradox,\u201d Mr. Dacanay said.<\/span><\/p>\n

Despite a \u201csqueeze in purchasing power,\u201d HSBC said Filipino consumers are spending more on nonessential products such as skincare, sports and takeout meals. <\/span><\/p>\n

\u201cThis is a testament that tastes and preferences change, more so with the Philippines being inches away from becoming an \u2018upper middle-income\u2019 economy.\u201d<\/p>\n

The government is targeting to achieve upper middle-income status by 2025. An upper middle-income country has a gross national income (GNI) per capita between $4,466 and $13,845.<\/p>\n

At present, the Philippines is classified as a lower middle-income country with a GNI per capita of $3,950.<\/p>\n

\u201cAll things considered, the slowdown in household consumption is likely temporary as Filipino households adjust their spending given how much inflation soared last year,\u201d HSBC said.<\/p>\n

Household spending, which accounts for more than three-fourths of economic growth, rose by 4.6% in the first quarter, the slowest since 2010.<\/p>\n

\u201cWhen inflation stabilizes, consumption should broadly pick up. But, when it does, demand for nonessentials will likely grow faster than essentials \u2014 a trend apt for a country that is inches away from becoming an \u2018upper-middle income\u2019 economy,\u201d it added.<\/p>\n

Headline inflation accelerated for a third straight month to 3.8% in April, bringing the four-month inflation average to 3.4%. The BSP sees full-year inflation at 3.5%. \u2014 Luisa Maria Jacinta C. Jocson<\/b><\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

THE BANGKO SENTRAL NG Pilipinas (BSP) may need to keep rates higher for longer or even hike rates further to cool inflation, HSBC said. This as it sees private consumption staying strong and spending patterns shifting as the Philippines inches closer to becoming an upper middle-income economy. In a report, HSBC economist for ASEAN (Association [\u2026]<\/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":[1685,5796,14644,15802,3550,3851,5406,4272,1454,11],"class_list":["post-19003","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-before","tag-bsp","tag-bworldonline","tag-hsbc","tag-keep","tag-needs","tag-policy","tag-than","tag-tighter","tag-years"],"yoast_head":"\nBSP needs to keep policy \u2018tighter than before\u2019 \u2014 HSBC - 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-needs-to-keep-policy-tighter-than-before-hsbc\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BSP needs to keep policy \u2018tighter than before\u2019 \u2014 HSBC - Energy Buzz\" \/>\n<meta property=\"og:description\" content=\"THE BANGKO SENTRAL NG Pilipinas (BSP) may need to keep rates higher for longer or even hike rates further to cool inflation, HSBC said. 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