Forex constructed inflation behind the Ved-Wet brake

Economists said on Friday that the latest step in attacking brakes in Bango Central NG Philipinas (BSP) policy rate would help reduce the risk of forex -stimulated inflation and taking into account the “renewed” strength of the US dollar.

In a commentary on Friday, it was clear that the HSBC economist of the ASEAN ARISSE DACKE explained the “rational” of the Central Bank to suspend its loosening cycle, and the Bahujan Samaj Party “should be flexible amidst the uncertainty in the world trade.”

In particular, the suspension of the easy -to -use cycle “would support Peso and alleviate the risk of FX -induced inflation, leading to the renewed US dollar strength.”

In a television interview on Friday, BSP Governor Eli M. Remolona Junior said the US dollar was likely to decline to Peso B60 against the US dollar.

“This is a chance. Don’t worry too much about the number. We are concerned about big oscillations at the alternative rate, because we get this inflation of the transfer rate, ”Remolona said.

The BSP leader explained this in the context of some of the imports of the Philippines “Invoice in Dollars”. So, he said, “If the swing is sufficient, you can get inflation effects. Then we want to reduce those oscillations somehow. ”

Asked about the current mechanism between the dollar and the Peso, the Bahujan Samaj Party leader said, “They are often operated by the strength of the dollar. Such is the case since the beginning of the year. ”

A day after the BSP’s seven -member monetary board decided to keep the policy rate at 5.75 per cent, some economists changed the time of their rate reduction predictions.

Tange said that the HSBC had previously predicted any cuts in the second quarter of 2025. However, the PSP is now expecting that he will restart policy rates during the June 2025 Monetary Board meeting.

“We expect to reduce the PSP policy rate by 25 pb 550 per cent. We have not changed our forecasts for 2h 2025,” the Asian HSBC economist noted that in August and December this year, the HSBC continues to expect a 25 -pp rate reduction, the annual policy is expected. The ratio settled at 5 percent.

However, Tange said that these predictions depend on the assumption that the Central Bank would reduce its policy rate to 3.50.

“The reverse risk of our view is directly. Any hawk slope of the central bank may raise the Bahujan Samaj Party’s relaxing cycle. The risk of FX-stounding inflation may grow and the spread between the BSP and the Central Bank’s rates is short.

However, Tange said, “We think we should be guaranteed with caution,” said Dange, and if growth is not continued, there is a risk of growth concerns than concern for forex fluctuations.

The HSBC pointed out that the BSP could eventually cut more than the central bank to make Beso more competitive. “After all, the most competitive peso will help to increase the demand for goods and service exports when the distribution chains change.”

For his part, City economist for the Philippines Nalin said, “We are editing our expectations of the next 25-BP per cent cuts until April, August and December.”

The Bank of Bahujan Samaj’s party expected to decline in February, June and August, he said.

“When we think that BSP can reduce a total of 75 PP this year, considering the difference in a high real policy rate and a positive interest rate difference with the central bank, the most cautious guidance for Governor Remolona’s total of 50 PP cut is the third cut. The City economist of the Philippines explained that there are many factors besides demand and inflation.

These depend on the central bank’s rate reduction time and the US trade policy measures, which “may have impacts on the US dollar strength, so some FX Basru is on the verge of inflation.”

The Philippines Peso P57.83 was closed on Friday, February 14, 2025.

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