BSP to keep policy rates on hold for now

Bangko Sentral ng Pilipinas (BSP) will announce its monetary policy decision on 26March.

Standard Chartered notes its views as follows:

• We expect the central bank to keep the reserve repo rate unchanged at 4.0% and the special deposit account rate unchanged at 2.5%. 
  
  
• Inflation has remained within BSP's 2-4% target this year, and is likely to slow further before rebounding by end-2015. 
  
  
• Food inflation has eased in recent months - to 4.8% in February from 8.3% in August 2014. We think BSP has room to keep policy rates unchanged for most of 2015. 
  
  
• We think the central bank will consider cutting policy rates if inflation eases significantly in the coming months and remains below the benign 2% level for more than six months.