Analyst sees steady rates despite new chief

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London-based research consultancy firm Capital Economics said the change in leadership at the Bangko Sentral ng Pilipinas (BSP) is not expected to result in a change to the central bank’s policy settings.

The research consultancy group is referring to the retirement of BSP Governor Amando Tetangco Jr. at the end of June and the assumption of the top BSP post by new appointee Deputy Governor Nestor Espenilla.

“We don’t think a changing of the guards will alter the outlook for monetary policy. Having been deputy governor since 2005, Espenilla represents continuity,” said Capital Economic’s Gather Leather.

“In recent interviews, despite emphasizing the importance of high growth and job creation, he also described the BSP’s main mandate of stable prices as a “basic fundamental that should be consistently met and not compromised,’” Leather added.


Capital Economics continues to think the BSP will be in little hurry to adjust its key interest rates soon.
“With fuel and electricity inflation set to ease as the low base caused by last year’s slump in oil prices drops out of the annual comparison, inflation should start to fall gradually over the coming months,” he said.

“Equally, with the economy continuing to expand at a decent pace, there is no need for monetary policy to be eased either,” he added, noting that gross domestic product grew by 6.6 percent year-on-year in the fourth quarter, helped by strong investment growth.

“We continue to think that the policy rate will remain unchanged at 3 percent through 2017,” Leather said.

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