Barclays: BSP likely to raise key rates Thursday

Barclays Capital, a global investment bank, has forecast that the Bangko Sentral ng Pilipinas (BSP) will likely raise its key rates by Thursday when the policy-setting Monetary Board discusses its stand on inflation. Prakriti Sofat, Barclays Capital regional economist based in Singapore, said April inflation may average at 4.4 percent while the BSP sees the consumer price index rising from 3.7 percent to 4.7 percent. Inflation was at 4.3 percent in February and in March. "Our sense is that if April inflation comes in at 4 percent or under then the BSP may use it as a reason to stand pat," Sofat said. However, the Barclays economist said, “Our base case remains for the BSP to raise the policy rate by 25 basis points to 4.5 percent and by a further 25 basis points in July given the upward trend in inflation." The BSP overnight borrowing rate is at 4.25 percent while the overnight lending rate is at 6.25 percent. These rates were set in the last BSP Monetary Board meeting on March 24. The board will meet Thursday, May 5, to assess its policy stance. BSP Governor Amando M. Tetangco Jr. has said that the Board has been watchful of world crude prices, and will consider all developments when it takes a new look at its monetary policy this week. — ELR/VS, GMA News