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Credit Suisse expects BSP to raise rates by 50 base points

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Financial services firm Credit Suisse said the local central bank needs to hike its interest rates by 50 basis points (bp) to dampen inflation expectation as the robust economic growth “comes at a cost.”

In a media briefing on Thursday, Sept. 6, Credit Suisse Managing Director and Chief Economist for Asia Pacific Ray Farris said that the Bangko Sentral ng Pilipinas (BSP) will likely raise its benchmark rates by 50 bp to temper inflation.

“We see a reasonable chance the BSP will want to send a signal to the markets that they recognize that the inflation is too high and it wants to ensure that it will come back under control by raising rates faster,” Mr. Farris told reporters. “We see a good chance for a 50 bp rate hike.”

Mr. Farris added that the central bank needs “re-establish a degree of balance in the system” to maximize economic growth in a longer period.

“You’re not really sacrificing growth because if you want to maximize growth over long periods of time, you need to keep inflation stable and low. So if the BSP doesn’t act and inflation continues to rise, it’s going to get worse.” — Karl Angelo N. Vidal