To shore up the currency and tame inflation, the Bangko Sentral ng Pilipinas has already raised its policy rate by 175 b.p. since May.
Down more than 11% for the year, the Philippines peso is one of Asia's worst-performing currencies. Its poor showing against the US dollar, propped up by an aggressive Federal Reserve set to deliver another 75 basis point rise on Wednesday, has led to a record trade deficit and higher inflation.
Over 60% majority of economists polled, or 13 of 21, expected a 50 basis point rise to 4.25% at its Sept. 22 meeting, compared with half of economists forecasting 4.00% in the previous poll. If realized, that would push the borrowing rate to the highest since August 2019. "The U.S. Fed's aggressive moves at a time when the Philippines' is under pressure continues to exert pressure on the PHP," noted Debalika Sarkar, economist at ANZ, referring to the peso currency.
Over 75%, or 13 of 17, forecast the interest rate to be at 4.50% or higher by year-end - also the expected peak in this cycle - 50 basis points higher than in the previous poll. Eight said 4.50%, and four said 4.75%. The remaining four said 4.25% or lower.