Thursday, December 12, 2013

Philippines holds interest rate at record low to aid typhoon recovery

Karl Lester M. Yap and Max Estayo in Bloomberg News: The Philippines held its benchmark interest rate at a record low for a ninth meeting to boost the economy’s recovery from Super Typhoon Haiyan, even as it raised its inflation forecast for next year.

Bangko Sentral ng Pilipinas kept the rate it pays lenders for overnight deposits at 3.5 percent, Governor Amando Tetangco said in Manila today, as forecast by all 16 economists surveyed by Bloomberg News.

The economy expanded at its slowest pace in more than a year last quarter, and policy makers predict damage from the typhoon will crimp growth through the first half of 2014. The central bank said potential increases in food and utility costs and a weakening peso could raise price pressures, while global funds pulled $43 million from Philippine stocks this month partly on concern that the U.S. will reduce monetary stimulus.

“There is a risk of Bangko Sentral considering a tightening move probably any time in the middle of next year, when inflation could peak at above or close to 5 percent,” said Emilio Neri, an economist at Bank of the Philippine Islands in Manila. “Less accommodative U.S. policy would entail further weakening of the peso,” he said, adding that higher utility prices could lead to a temporary breach of the inflation target....

A 100-peso Philippine note, Bangko Sentral ng Pilipinas... in the public domain, but not negotiable

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