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MANILA: The Philippine central bank is widely expected to keep its key interest rate unchanged at a record low of 4 per cent at a policy review this week and will likely hold off on any major changes in its liquidity measures.
All 16 economists polled by Reuters expect the central bank to keep its key policy rate steady, but they were equally split over the timing of the first rate increase.
Half see the first rate rise in the second quarter, the other half see a rise in Q3. The central bank is almost certain to keep its policy rates unchanged for the sixth meeting in a row on Thursday, after central bank Deputy Governor Diwa Guinigundo said at the weekend authorities were unlikely to raise rates even though core inflation had ticked higher last month.
Indeed, they have signaled a benign view of inflation suggesting the central bank is not in a rush to tighten policy either and prompting some expectations for a rate rise to be shifted back slightly.
Before the last policy meeting on Jan. 28, two-thirds of economists polled by Reuters said the first rate increase would be in the second quarter.
Now they are evenly split between the second and third quarter. The shift came after the central bank last month gave a clearer idea of its inflation expectations, suggesting price pressures would peak around 5 percent in the second and third quarters.
Few analysts expect a rate rise before the May 10 national polls. A rate rise on June 3, its first policy meeting after the elections, could start a series of increases taking the rate to as high as 5 percent by the end of 2010, analysts say. -Reuters
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