 |
 |
|
|
       |
BSP may raise rates next mo |
|
By Donnabelle L. Gatdula
The Philippine Star 01/23/2006 The Bangko Sentral ng Pilipinas (BSP) may increase its key policy rates next month to cushion the impact of the expected increase in consumer prices brought about by the adjustment in the expanded value-added tax (EVAT) from 10 percent to 12 percent, an international research firm said. In its latest economic review, UBS Securities said "inflation concerns are likely to prompt the Bangko Sentral to tighten monetary policy somewhat more in the near-term, and we are looking for a 25 basis points increase in the policy rate over the next three months." However, because of "the continued peso strength, the BSP is likely to tighten less than we had previously expected; we revise our tightening expectations down to 25 basis points from 50 basis points," UBS said. "The BSP hiked policy interest rates by a total of 75 bp in 2005. A strong peso allowed the central bank to decouple from the Fed without jeopardizing exchange rate stability, which has historically been a key policy goal of the central bank," it said. UBS expects the nationwide inflation rate to hover at seven to eight percent over the next 12 months due to the expected increase in EVAT. The research firm, on the other hand, expects the economic growth to unlikely break out of the 4.5 to 5.5 percent range until there is a visible turnaround in investment, which "we do not expect for a foreseeable future". "Investment is unlikely to accelerate meaningfully until both the fiscal and political outlooks become clearer. A history of poor fiscal management, little infrastructure spending by the government, and low national savings rates has left the Philippines with the lowest investment-to-gross domestic product (GDP) ratio in Asia," it said. But it noted that rapidly rising remittances should continue to support consumption growth at around 4.5 to five percent, offsetting the inflationary impact of a two percentage point hike in VAT rate–provided in gets implemented on Feb.1. The firm believed that 2006 will bring improvement to the country’s budget and debt levels. "We expect both the budget deficit and the debt-to-GDP ratio to fall in 2006, even without the hike in the VAT rate to 12 percent from 10 percent currently," UBS said. "However, such a hike would provide a welcome buffer for collection shortfalls or provide some room for a spending increase in the medium-term," it added. |
 |
Circular Letters/Memoranda |
|
Speeches/ Presentations |
|
Photo Gallery |
|
The 2008 RBAP Charter Symposium |
|
2008 CFI Awards |
|
Rural Banking Week Celebration Golf Tournament |
|
Client Satisfaction Survey for Licensing Management System of the Supervision and Examination Sector |
|
Financial Reporting Package 2008 |
|
BSP releases regulations on liquidity, market risk weighting |
