Barclays still discounts hike in BSP rates despite inflation uptick in November ’15

By Joann Santiago

MANILA, Dec. 4 (PNA) — An economist of banking giant Barclays continues to discount any adjustment in the central bank’s key rates this year despite an uptick in Philippines’ inflation rate in November 2015.

In a research note, Rahul Bajoria said the speed of the inflation rate last November, at 1.1 percent from month-ago’s 0.4 percent, came in as a surprise since market consensus and Barclays forecast it at 0.7 percent.

Inflation in the first 11 months this year averaged at 1.4 percent, still below the government’s two to four percent target. Year-ago inflation was way higher at 3.7 percent.

Barclays forecasts 2015 domestic inflation to average at 1.4 percent while it is seen to average at 2.4 percent in 2016.

“Following today’s print, we remain comfortable with our forecasts, as they incorporate a manageable pace of core inflation and a modest increase in energy costs in 2016, ” the research note said citing that Barclays “continue(s) to believe the medium-term risks to inflation center on El Niño and its potential impact on agricultural prices.”

With inflation seen to stay within-target in the near term, Bajoria does not see any adjustment in the central bank’s key rates when the policy-making Monetary Board (MB) holds its rate setting meet on Dec. 17.

“BSP appears comfortable with its policy stance, emphasizing that growth and inflation risks stem largely from poor weather and the uncertain global backdrop,” he added. (PNA)