Philippine central bank, which is set to meet this week, is expected to keep the interest rate on hold as inflation appears to have peaked in October, according to a DBS Bank research report. In October, the headline inflation rose 6.7 percent; however, it has eased in the month-on-month basis to 0.3 percent.
BSP repeated that inflation might dissipate towards the end of this year and next year as the effect of the 1st phase TRAIN wears off and fuel prices retreats. Moreover, growth has decelerated further to 6.1 percent in the third quarter as widely anticipated before picking up steam in the fourth quarter because of election spending acceleration and further fall in inflation that will stimulate private consumption.
“In addition, in their recent statements, BSP pointed out two important factors implying rate hike is less likely in the next policy meeting: first, domestic demand with the current level of GDP growth is not inflationary and second, inflation has peaked and will decelerate further”, added DBS Bank.