Friday, December 13, 2019
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Philippines holds rate at record low as inflation pressures rise

MANILA: The Philippines held its benchmark interest rate at a record low for a 10th straight meeting to boost economic growth, even as inflation accelerates.
Bangko Sentral ng Pilipinas kept the rate it pays lenders for overnight deposits at 3.5 percent, according to a statement in Manila, as forecast by 16 of 17 economists surveyed by Bloomberg News. One predicted an increase to 3.75 percent.
Policymakers’ room to keep interest rates unchanged may be narrowing, Governor Amando Tetangco said, after a report showed Philippine inflation quickened to a two-year high in January.
The peso slumped to its lowest level in more than three years this week as a reduction in US monetary stimulus pummeled stocks and currencies in emerging markets.
“There is still space for the central bank to keep rates on hold,” Trinh Nguyen, a Hong Kong-based economist at HSBC Holdings, said before the decision.
“The central bank will be more vigilant on inflation and will probably raise rates” at a later meeting, with price-gains data for February probably influencing how soon it will take action, she said.
The peso has lost almost 2 percent against the dollar this year, the worst performer after the Korean won among 11 most- traded Asian currencies tracked by Bloomberg. Philippine stocks have dropped about 8 percent in the past six months.
The Philippines will probably end three quarters of slowing growth in the current period as rebuilding after Typhoon Haiyan picks up, Economic Planning Secretary Arsenio Balisacan said this week. Expansion in the three months through March may be faster than the 6.5 percent pace recorded in the October- December period, he said.
Consumer prices rose 4.2 percent from a year earlier last month, the fastest pace since Dec. 2011. The central bank targets inflation to average 3 percent to 5 percent this year.
President Benigno Aquino is increasing spending on infrastructure to a record this year to lure investments and boost expansion to as much as 7.5 percent. San Miguel Corp., Ayala Corp. and Megawide Construction Corp. are among companies building schools, power plants and roads in the country.