Hongkong and Shanghai Banking Corp. (HSBC) said Friday the benchmark interest rates of the Bangko Sentral ng Pilipinas will not move from 4 percent, at least not in the next nine months.
“They did what they could to jump-start domestic spending,” said HSBC economist Trinh Nguyen, in a market report of the London-based bank.
She pointed to “weak external conditions” as the set of factors that triggered Thursday’s rate cut of 25 basis points or one-fourth of 1percent.
“For the remainder of the year, inflationary concerns from ample liquidity and high oil prices will motivate it (BSP) to stay put,” Nguyen added.
Citing benign inflation and the subdued global economy, the BSP said its policy making Monetary Board opted for the rate cut as a “measured reduction in policy rates to support economic activity and reinforce confidence.”
“Commercial banks’ loans have been growing steadily at double-digit rates since January 2011,” the BSP noted. Aggregate production loans consistently stayed about P2 trillion every month last year.
“In the midst of weaker global economic prospects, robust credit growth should provide adequate support to domestic production, investment, and spending,” according to the BSP. — ELR/VS, GMA News