MANILA: The Philippine central bank is widely expected to raise interest rates for the first time in more than three years on Thursday, as it tries to contain inflationary pressure while the economy maintains a brisk pace of growth in the first quarter, Reuters polls show.
The Southeast Asian economy has enjoyed 76 quarters of uninterrupted annual growth driven by higher government infrastructure spending, strong exports and consumer demand.
The economy is estimated to have expanded a seasonally adjusted 1.5 percent in the January-March quarter over the prior three months, according to the median forecast of three of 12 institutions, in line with the previous quarter. Economists' projections ranged from 1.2 percent to 1.8 percent.
From a year earlier, gross domestic product was forecast to have grown 6.8 percent, faster than the previous quarter's 6.5 percent expansion, but below the government's 7-8 percent growth target for the full year.
Bangko Sentral ng Pilipinas Governor Nestor Espenilla said in March the economy was strong enough to absorb policy tightening if needed, noting that inflation expectations had started to rise.
The central bank expects inflation, already running at five-year peaks due to higher fuel prices and new and additional taxes on certain commodities, to remain elevated later this year before returning inside its 2-4 percent comfort range in 2019.
Eleven of 12 institutions in the poll predicted the central bank would raise its benchmark rate by 25 basis points to 3.25 percent at its rate review on Thursday to temper inflation expectations. The lone dissenter expected rates to be kept on hold.
Some economists forecast further rate rises later in the year, with at least one calling for two more rate increases after Thursday's expected move.
Others expect the central bank to hold rates steady after pulling the trigger on Thursday, to assess their economic impact.
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