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Philippines Policy Rate 6.5% (consensus 6.5%) in Dec-23

• The BSP’s decision to maintain the policy rate at 6.5%, in line with consensus forecasts, is driven by a slight moderation in inflation forecasts and anchored expectations, reflecting an effective current policy stance in managing inflation risks.
• The Monetary Board's focus on sustaining economic growth, alongside a vigilant approach to inflation, underscores the balance between supporting economic resilience and maintaining price stability.
• The BSP’s readiness to adjust monetary policy settings in the future, depending on economic data and conditions, demonstrates a flexible and adaptive policy approach, ensuring responsiveness to both inflationary pressures and growth dynamics.

Philippines CPI Inflation 4.1% y-o-y (consensus 4.3) in Nov-23

- November 2023 CPI inflation in the Philippines stood at 4.1% year-on-year, 0.2pp below the consensus estimate, reaching the lowest rate since March 2022.
- Core inflation in November 2023 slowed to 4.7% year-on-year, indicating a similarly surprising moderation in inflation.

Philippines Policy Rate 6.5% (consensus 6.5) in Nov-23

• The BSP’s decision to maintain the policy rate at 6.5% reflects a strategic pause, balancing the need to control inflation against potential over-tightening risks, demonstrating a calibrated approach to monetary policy effectiveness.
• Acknowledging the balance of risks, predominantly skewed towards the upside due to various external and domestic factors, the BSP’s policy stance is characterized by a dynamic and responsive approach to evolving economic conditions.
• Commitment to maintaining tight monetary policy settings until inflation trends downward, coupled with the readiness for further adjustments based on incoming data, underscores a flexible yet disciplined focus on price stability and economic growth.

China/US: Of Mountains And Molehills

• That Joe Biden and Xi Jinping will meet in person this week is to be welcomed. Furthermore, low expectations allow both sides to claim some ‘wins’. However, those expectations are rooted in the low probability of any substantive improvement in their relations.

By Alastair Newton