Citigroup: Most Asian central banks to keep interest rates steady

Central banks in the Asia Pacific region, including the Bangko Sentral ng Pilipinas (BSP), will keep interest rates steady for the rest of 2012, US-based Citigroup said Monday.

 

Its position is the subject of Citigroup’s Asia Macro and Strategy Outlook, entitled “Growth Risk Rising: Who Could Lean More on Monetary Policy.” 

 

“We have not made any major changes to our monetary policy calls in Asia, and believe the case for cutting rates at this juncture is far from clear. Our base case scenario is that almost everyone in Asia is keeping interest rate or monetary policy stance unchanged this year,” Citigroup added.

 

Most Asian central banks would likely start tightening monetary policy in 2013, the investment bank pointed, saying interest rates are already historically low and core inflation expectations are stickier.

 

The BSP reduced interest rates by 50 basis points this year on low inflation outlook in an atmosphere of fragile global economic growth. This brought the overnight borrowing rate back to a record low 4 percent and the overnight lending rate to 6 percent. —VS, GMA News