BSP keeps rates unchanged; inflation still global problem

The Bangko Sentral ng Pilipinas (BSP) [link] elected to keep interest rates steady after the PSA inflation data for March showed that inflation quickened here to 3.7% (increased for the third straight month). In its statement, the BSP said that the “risks to the inflation outlook remain tilted to the upside”, but noted that while these risks have “raised inflation expectations”, those expectations are “broadly anchored.”

MB bottom-line: Higher for longer. The US just received an unexpectedly hot inflation report for March (Singapore too), and that had the Fed making the same rate-cut delay sounds as our own BSP. I’m not going to do a deep dive into the line items of the PSA’s report, but I can’t help but think it’s ominous for the price spike in rice to be basically half of the inflationary increase measured for the period. This has got to be an “all hands on deck” moment for the government. The issue isn’t demand, so the solution isn’t going to be found in adjusting the cost of capital.

---

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.