MANILA ⸺ The Philippine central bank is expected to keep its benchmark interest rate at a record low on Thursday, after the economy likely contracted for a fifth straight quarter in the January to March period, a Reuters poll showed.
All 13 economists surveyed predicted the Bangko Sentral ng Pilipinas (BSP) will keep the rate on its overnight reverse repurchase facility at 2.0% for a fourth straight meeting.
The central bank meeting will follow government data on Tuesday that is expected to show gross domestic product (GDP) shrank 3.0% in the first quarter from a year ago, though marking an improvement on the 8.3% slump in the preceding quarter.
“We expect the BSP to remain on hold … with the central bank likely noting the appropriateness of current monetary policy settings as the country battles the ongoing wave of (COVID-19) infections,” J.P. Morgan economists said in a note.
A surge in coronavirus cases that began in March has forced the Philippines, already battling one of the worst outbreaks in Asia, to reimpose stricter curbs in the capital and nearby provinces.
The capital region, an urban sprawl of 16 cities home to at least 13 million people, accounts for 40% of the country’s total economic output.
Some economists expect the BSP to keep rates unchanged for the rest of 2021, despite inflation breaching a 2%-4% target band mainly due to tight pork supplies.
The BSP has vowed to continue supporting the economy, which shrank by a record 9.6% last year due to lockdowns.
While the economy is forecast to bounce back this year, some economists said the rebound may disappoint, with a slow vaccine rollout adding to growth concerns.
Economic growth will probably be closer to 4.0% this year, said Steve Cochrane, chief Asia-Pacific economist at Moody’s Analytics, compared with the government’s 6.5%-7.5% target.
Reporting by Enrico Dela Cruz; Editing by Ed Davies; Reuters