Research: Monetary Policy Rates Will Remain unchanged in Philippines for the Rest of the Year

Quotes from Barclays Capital:

-Bangko Sentral ng Pilipinas kept the reverse repo rate unchanged at 4%, in line with our forecast and consensus. The repo rate now stands at 6%. The central bank has cut policy rates by a cumulative 50bp in the current cycle, effectively reversing the two hikes it implemented in 2011. Interest rates are now back at the historical lows they reached in the aftermath of the global financial crisis.

-We believe rates will remain unchanged at 4% for the rest of the year as the central bank passes the baton to the government in terms of supporting growth. We are cautiously optimistic that government capex outlays will pick up in 2012, given the strong push from the president to increase spending, the systems put in place last year, and the delineation of specific projects in the budget. Our base case is also for the PPP programme to gain momentum through 2012, supporting an acceleration in growth to 4.2%, up from 3.7% last year