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BSP rate hike unlikely to hurt economy as recovery underway: BPI economist

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Jessica Fenol, ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img alt="Market workers arrange their goods for sale inside the Suki Market in Quezon City on December 11, 2021. George Calvelo, ABS-CBN News/File" src="https://sa.kapamilya.com/absnews/abscbnnews/media/2022/tvpatrol/07/28/20211211-market-noche-buena-goods-gc-7574-(1).jpg"/><figcaption>Market workers arrange their goods for sale inside the Suki Market in Quezon City on December 11, 2021. <em>George Calvelo, ABS-CBN News/File</em></figcaption></figure></div><p>MANILA - The recent hike in interest rates is unlikely to weigh down the country&#x27;s economic growth, BPI lead economist Jun Neri said Thursday.</p><p>The Bangko Sentral ng Pilipinas recently announced an <a href="https://news.abs-cbn.com/business/07/14/22/in-surprise-move-bsp-hikes-interest-rate-by-75-basis-points">off-cycle</a> 75-basis points rate hike in July to tame inflation. </p><p>The BSP has so far hiked its benchmark rate by 125 points this year, bringing the policy rate to 3.25 percent, after keeping it at a record low of 2 percent for almost 2 years. </p><p>&quot;The rate hike probably won’t hurt [the] domestic economy that much because for one we’re just going back to pre-pandemic level,&quot; Neri told reporters.</p><p>Data showed that the economy managed to grow at an average pace of 6.4 percent from 2010 to 2019 even with an average policy rate of 3.8 percent or near 4 percent, Neri said. </p><p>In the second quarter, BPI said it expects a &quot;robust GDP growth&quot; following the <a href="https://news.abs-cbn.com/business/05/12/22/ph-economy-expands-83-pct-in-first-quarter-of-2022">8.3 percent</a> expansion in the first quarter.</p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/05/19/22/bsp-says-higher-gdp-growth-seen-in-q2">BSP says higher GDP growth seen in Q2, Philippines &#x27;on track&#x27; to meet 2022 target</a></li></ul><p>Growth in Q2 was fueled by the campaign spending leading to the May national elections, the recovery in retail as COVID-19 restrictions were eased and the return of consumer spending as seen in recent loan growth and credit card spending based on internal data, Neri said.</p><p>Neri also noted the pickup in tourism as well as improving consumer outlook in the next few months based on the Bangko Sentral ng Pilipinas Consumer Confidence Survey.</p><p>&quot;There’s no denying anymore that recovery is underway,&quot; he said.</p><p>However, the soaring inflation could drag household consumption and investments in the third quarter. The ongoing crisis between Russia and Ukraine also remains as a threat to the Philippine economic recovery, BPI said.</p><p>Inflation quickened to 6.1 percent in July largely as prices of crude oil and other commodities soared after Russia&#x27;s invasion of Ukraine.</p><p>The peso could have stayed at P54 to a $1 if the BSP reacted faster, Neri said.</p><p>“Because of the late reaction of the BSP, the consequence for us is to go much higher. Kaya sana nag P54 (P54 could have been possible) if the rate hikes are more timely,&quot; he said. </p><p>BPI lead strategist Marco Javier said peso could average at P55.30 to $1 in the fourth quarter. </p><p>The BSP has signaled that it is ready to hike rates further after the Federal Reserve hiked US rates by another 75 basis points late Wednesday.</p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/07/28/22/bsp-signals-further-rate-hikes-after-fed-raises-rates">Bangko Sentral signals further rate hikes after Fed raises rates</a></li>	<li><a href="https://news.abs-cbn.com/business/07/19/22/another-100-bps-rate-hike-unlikely-to-hurt-economy-analyst">Another 100-bps rate hike by the BSP unlikely to hurt economy: analyst</a></li></ul><div><strong>RELATED VIDEO:</strong></div><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=2123372" width="100%"></iframe></figure><div class="iwantbar">Watch more News on <a href="https://www.iwanttfc.com/#!/browse/Genres/News/tag_id_genres/id_news" target="_blank">iWantTFC</a></div>

The recent hike in interest rates is unlikely to weigh down the country's economic growth, BPI lead economist Jun Neri said Thursday.

BSP rate hike unlikely to hurt economy as recovery underway: BPI economist

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BSP rate hike unlikely to hurt economy as recovery underway: BPI economist

Jessica Fenol,

ABS-CBN News

Published Jul 28, 2022 02:47 PM PHT

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