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By Maricel E. Burgonio, Reporter
LENDING is expected to pick up this year on the
back of successive cuts in the Bangko Sentral ng Pilipinas’ (BSP)
key interest rates, the country’s second-largest bank said
Thursday.
In a briefing, Aurelio Montinola, Bank of the
Philippine Islands (BPI) president, said lenders may grow their
credit extension business by 12 percent this year from an estimated
11 percent last year.
Montinola said the BSP has flexibility to
further cut its policy rates. Reduction in the central bank’s
overnight rates is supposed to put downward pressure on lending
rates.
“There was lots of talk that the US is going
to be bringing down its interest rate. If that happens there will be
pressure on Philippine interest rates to [go] down,” he said.
Having said this, the BPI executive said
interest rates may still “rise a bit” given rising inflation.
He said the average consumer price increase this
year may reach the high end of the BSP’s target this year. The
lender set its forecast at 3.8 percent this year from 2.8 percent
last year citing high world oil prices.
The BSP earlier forecast inflation at between 3
percent and 4 percent this year.
“Inflation is expected to be soft despite high
oil prices,” Montinola said.
In December, inflation picked up to 3.9 percent
from 3.2 percent the month before. High oil prices could put
pressure on wages and transport fares and affect economic growth.
Besides the high level of oil prices, a US
slowdown would impact global growth, pulling down the Philippines
along with it.
BPI said the country’s gross domestic product
(GDP) may grow from 6 percent to 6.2 percent this year driven by
domestic consumption, higher infrastructure spending, and continued
growth of the services sector.
“Our outlook for the Philippine economy
remains positive and we will continue to assist in capital markets
development,” Montinola said. The government has set a GDP growth
target of 6.3 percent to 6.7 percent this year.
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