Rising Inflation, Oil Prices to Affect Local Interest Rates
Byline: FIL C. SIONIL
Domestic interest rates could take an asymmetrical glide next week, despite the stay in the Bangko Sentral ng Pilipinas (BSP) policy rates, due to the spiraling inflation and accelerating domestic pump prices of oil and other petroleum products that have spawned call for increase in wages by both the public and private workforce.
Market sources interviewed by Business Bulletin said "pressures" for local interest rates to go up have mounted due to recent market developments onshore and offshore, notably the 25 basis points hike in the US state-fund rate but teeming liquidity in the financial system could curb its uphill climb.
"The sentiment is for interest rates to climb. This will be shown in the bidrates for T-bills (treasury bills) Monday," a source from a domestic commercial bank said.
While the regulators tried to dampen the impact of the decision by the US Federal Reserve to bring its state fund rate to 1.50 percent by keep the overnight interest rates at 6.75 percent for borrowing, factors such as inflation outlook, the uncertainty in the prices of oil in the international market, mounting call for wage hike could push interest rates up on longer-end of the T-bills yield curve, the source said. …