Philippines Macroeconomist/Strategist

Jun Trinidad

Macroeconomics

<ul class=""><li>In the IMF Mission’s recent Article IV consultations with Philippine gov’t officials, Fund staff raised the need for appropriate monetary adjustment in light of strong domestic credit lubricating potential overheating risk.</li><li>Higher interest rate environment has been expected for some time and perhaps may now just be a question of when and under what circumstances. The implementation of the tax reform program and ODA-funded infra projects in 2H18 that contain strong demand and price catalysts could finally prompt BSP to hike by 50bp.</li><li>Expanded term deposit facility (TDF) volume and extended TDF tenors may complement the rate hikes. TDF adjustments can help ease expansion of BSP’s (Central Bank) balance sheet and consequently, money supply, that’s correlated with domestic credit growth.</li><li>A backdrop of rising rates will ease PHP weakness to within 51-52 range in 2018.</li><li>Buy stocks on weakness amid strong GDP prospects. Post-rate hikes, extend duration exposure.</li></ul>

In the IMF Mission’s recent Article IV consultations with Philippine gov’t officials, Fund staff raised the need for appropriate monetary adjustment in light of strong domestic credit lubricating potential overheating risk.Higher interest rate environment has been expected for some time and perhaps may now just be a question of when and under what circumstances. The implementation of the tax reform program and ODA-funded infra projects in 2H18 that contain strong demand and price catalysts could finally prompt BSP to hike by 50bp.Expanded term deposit facility (TDF) volume and extended TDF tenors may complement the rate hikes. TDF adjustments can help ease expansion of BSP’s (Central Bank) balance sheet and consequently, money supply, that’s correlated with domestic credit growth.A backdrop of rising rates will ease PHP weakness to within 51-52 range in 2018.Buy stocks on weakness amid strong GDP prospects. Post-rate hikes, extend duration exposure.

Potential Overheating or Just a Case of 'overdue' Monetary Tightening?