MANILA— The Bangko Sentral ng Pilipinas could begin gradually tightening monetary policy in 2022 by bringing the interest rate to 2.75 by the end of next year, Fitch Solutions said Friday.

In a statement, Fitch Solutions said it expects 75-basis point hikes next year.

The BSP has kept the country's benchmark interest rate at 2 percent for the entire year to support economic recovery.

"We at Fitch Solutions maintain our view that the Bangko Sentral ng Pilipinas will only gradually tighten monetary policy through 2022, as it looks to the economic recovery for guidance," it said in a statement.

"As such, we forecast 75bps of hikes to the key policy rate in 2022, taking it to 2.75 percent by yearend," it added.

Market pressure due to elevated inflation is also anticipated, the company said.

Inflation has been hovering still above the government target of 2 to 4 percent.

• Bangko Sentral ng Pilipinas maintains interest rate at 2 pct as economy sits on 'firmer ground'

On Thursday, the Monetary Board raised the inflation forecast to 4.4 percent for 2021, from the previous forecast of 4.3 percent. For 2022, it was revised to 3.4 percent from 3.3 percent.

The inflation forecast for 2023 was maintained at 3.2 percent.

Fitch Solutions said it expects the headline inflation rate to ease to 4.4 percent in 2021, in line with the central bank's forecast. Inflation could settle at 3.6 percent in 2022, falling back within target, it said.

"We also believe recovering demand-side price pressures will prompt the BSP to begin monetary tightening to curb inflation," Fitch Solutions said.

Other central banks have started to tighten monetary policies to arrest rising inflation.

US Federal Reserve Chair Jerome Powell on Wednesday signaled that the Fed might implement several rate hikes in 2022 to fight inflation.

• Delta variant spread could delay Fed policy shift: BSP chief

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