Chinabank expects BSP to keep rates steady amid inflation worries

Chinabank anticipates the Bangko Sentral ng Pilipinas (BSP) will maintain a cautious stance on policy rate adjustments, despite a recent slowdown in inflation.

The bank still forecasts a 25 basis point cut in the BSP's policy rate on June 19, bringing it down to 5.25 percent, as local inflation fell to 1.3 percent in May, below the BSP's target.

However, Chinabank highlights that the BSP will likely consider risks such as rising food prices and a proposed legislated wage increase for private-sector workers.

While rice prices have decreased, the cost of meat, eggs, fish, and vegetables has increased, contributing to upside risks for inflation.

The bank warns that overall inflation could accelerate if a P200 minimum wage hike for private-sector workers is enacted.

Chinabank also noted that the BSP will closely monitor geopolitical tensions between the US and Iran, which could impact oil prices.