The central bank will likely continue to keep its two percent policy rate until the fourth quarter this year and is expected to raise the benchmark by 50 basis points and another 100 bps in 2023, according to a British bank.
Stanchart is projecting that in the fourth quarter 2021, GDP may have expanded by 6.5 percent due to increased mobility during the quarter, which would bring the full year growth to 7.1 percent, higher than earlier forecast of five percent. For this year, the British bank expects the local economy to grow by 7.5 percent and by 2023, to slow down to 5.3 percent. They revised higher their GDP forecast for 2022 due to the strong recovery in the third quarter 2021.
Stanchart head of ASA FX Research, Divya Devesh, said the peso vis-à-vis the US dollar will likely close at P52.50 by end-2022 because of the current account deficit. By 2023, the peso may hold its level at P52.70. Ko said the reserve requirement ratio which the BSP has also put on hold for 2021, may still be untouched this year. However, the central bank may move to reduce the ratios if credit growth picks up. “But at the moment, liquidity is pretty ample and there’s always the bias to ease RRR as been alluded to as well in a number of times,” he added.
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