THE Bangko Sentral ng Pilipinas (BSP) could still resort to another policy rate cut early next year to further support the recovery, with the stock market seen benefiting the most from the low interest rate environment, according to Sun Life Asset Management Co., Inc.
In a briefing Thursday, Sun Life Asset Management Chief Investment Officer Michael Gerard D. Enriquez said the Monetary Board could decide to ease by another 25 basis points (bps) in the first quarter of 2021.
The BSP has reduced rates by 200 bps so far this year, bringing policy rates to record lows.
The projected cut will help the economy sustain its rebound to growth of 6-7% by 2022 following a prolonged effort to contain the coronavirus, it said.
Sun Life Asset Management forecasts a 7.2% contraction in gross domestic product this year, followed by a 4-5% rise in 2021 and 6-7% in 2022.
Mr. Enriquez said the recovery will likely be slow with quarantine restrictions still in place.
“We don’t think 2021 has potential to be a strong recovery year unless a fiscal stimulus is passed early and impacts households. Hence, we expect an extended U-shaped type of recovery,” he said.
In a low-interest rate environment, he said the stock market is likely to benefit, with investors not getting their desired yields from bonds.
“For those looking for yield, the PSEi (Philippine Stock Exchange index) has been a go-to for those who would want to have a longer-term view of how they would want to manage their portfolio,” he said. — Beatrice M. Laforga