The BSP voted to keep benchmark interest rates unchanged on Thursday, keeping the range at a nine-year-high 4.25% to 5.25%. Inflation is expected to trek a “lower path” over the next two years, prompting the BSP to steady benchmark rates. BSP Assistant Governor Dakila projects inflation to dip below four percent by the end of Q1 2019.
This decision comes after five consecutive tightening moves by the monetary board, bringing inflation up a total of 175 basis points. Analysts attribute the deceleration to price pressures from food and oil “finally dissipating”. After 10 straight months of accelerating, headline inflation has taken a turn and is likely to head back to target by next year,” said BPI lead economist Emilio S. Neri, Jr.
Meanwhile, Congress adjourned this week for its Dec. 15 to Jan. 13 holiday break, putting discussions on the second tax reform package on hold. While talks will resume come Jan. 14, the Finance Department fears the looming midterm elections may distract from the Senate Ways and Means committee discussions on cutting corporate income tax rates and fiscal incentives.
Preliminary data from the Philippines Statistics Authority showed October trade at a $4.212 billion deficit, a new record high, up from September’s $3.723 billion and October 2017’s $2.585 billion. Cumulatively, the balance of trade yielded a $33.918-billion deficit, bigger than the $20.128-billion gap recorded in last year’s comparable 10 months.
The Trade Department leads a host of state agencies calling for the repeal or amendment of a suite of laws, in a bid to further ease the burden on small businesses and to improve public services. These include the Bulk Sales Law (made obsolete by technological developments) and the Bonded Warehouse Act (made redundant by new government measures to ensure food sufficiency and stable prices).