Quick look at the week ahead

On the domestic front, we start the week off with MPI’s delisting today, and then... nothing. On the international front, we should hear about America’s initial jobless claims and consumer price index data for September on Friday morning.

 

MB bottom-line: If the US Federal Reserve’s Federal Open Market Committee (FOMC) increases rates at the end of this month, it will put pressure on the BSP to do the same if, in the time between the FOMC’s November 2 decision and the BSP’s next Monetary Board meeting on November 16, the rate differential between the US and the Philippines causes the Philippine Peso to lose value relative to the US Dollar. The BSP’s Governor, Eli Remolona, has been explicit about his intention to defend the P57:$1 exchange rate level, which could entail increasing PH rates (among other potential BSP interventions). Raising rates to protect the exchange rate would be a choice with real consequences, considering that our economy has been faltering and that the cause of our own inflation has likely a lot more to do with the government’s handling of the flow/availability of basic food staples and is not tied to a surplus of local capital driving up prices. 

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