MANILA, Philippines – UK-Barclays said it expects monetary authorities to keep rates steady next week but stressed macroprudential measures may be deployed.
“BSP (Bangko Sentral ng Pilipinas) is likely to maintain a hawkish stance, as inflation inches higher, and growth remains robust,” Barclays said in a research note.
“We believe some measures to tighten liquidity further, like hike in SDA (Special Deposit Account) rates or RRR (Reserve Requirement Ratio) levels, are likely,” the bank said.
Monetary authorities, during their last meeting on March 27, maintained overnight borrowing and overnight lending rates but hiked the RRR by one percent to mop up liquidity.
BSP Governor Amando M. Tetangco Jr. said inflation expectations remain within the three- to five-percent target this year and from two to four percent in 2015.
The Monetary Board will revisit policy settings on May 8.
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Barclays said it expects the BSP to hike key policy rates by 25 basis points during its June meeting.
Overnight borrowing and overnight lending rates have been kept at 3.5 percent and 5.5 percent, respectively, since October 2012.
The decision to adjust the RRR in March was meant to scale down liquidity growth, which has remained above 30 percent since July next year.
The relatively high liquidity growth was a product of the adjustments made on the SDA wherein the BSP restricted the access of investment management accounts and cut the interest rates on the facility by 150 basis points last year.
