Hike, cut or hold?

PHILIPPINES - In Brief 08 Jan 2019 by Romeo Bernardo

The inflation outlook has become much more benign following price declines over the last two months. We now expect the headline rate to fall back within target (2-4%) this quarter, averaging 2.9% for the full year. The significant adjustment in our inflation forecast since December (3.9%) also considers the impact of the rice tariffication bill. Rice prices have been falling in recent months, possibly influenced by expectations of a freer import regime. We tried to get into the BSP’s mind regarding its policy choices for this year and arrived at the conclusion that all else equal, it will l...

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