|
By Maricel E. Burgonio, Reporter
UNION Bank of Switzerland (UBS) said the Bangko
Sentral ng Pilipinas (BSP) will increase its key policy rates well
into next year to assure price stability.
In a research note, UBS said monetary
authorities are likely to increase they key policy rates by 50 basis
points in the second half of the year and by another 25 points next
year.
The Swiss banking giant estimated that BSP’s
overnight borrowing rate would reach 5.75 percent this year and 6
percent next year.
“The Philippine policy rate and short term
money market yields have no such stable relationship,” UBS said.
The one-year Treasury bill rate eased to 6.703
percent on Monday’s auction of the IOUs, from 6.79 percent
previously.
The BSP’s overnight borrowing and lending
rates stand at 5.25 percent and 7.25 percent, respectively, after
the central bank raised rates two weeks ago. In raising the rates,
the policy-making Monetary Board said it saw early signs of
supply-driven inflationary pressures feeding into demand.
Higher oil and commodity prices have triggered
increases in labor wages, electricity rates, and transport
fares—all of which are considered demand-driven pressures.
The BSP forecast inflation to peak at 10 percent
to 11 percent in the third quarter of the year. Price increases
accelerated to a nine-year high of 9.6 percent in May.
The government is finalizing the country’s
borrowing program for July to September this year, adding it may
resume its two short-term windows—the 91- and 182-day
T-bills—given “a lot of interest.”
In February, the bureau cancelled auctions of
the three- and six-month debt papers scheduled for the second
quarter due to consistent failures as banks sought higher yields.
At the Philippine Dealing System, the peso rose
against the dollar, closing at 44.500 from 44.600 on Monday. “The
BSP has not defended the peso yesterday, it’s a pure market
play,” a trader said.
The local currency is expected to reach 45 to 46
against the greenback by the end of the year if oil prices go up to
$150 per barrel. Should oil prices dip below $150, the peso,
however, could average 43.50, a trader said.
|
