Philippine Bonds Fall as BSP May Refrain From Further Easing

Posted By on March 2, 2012

(Bloomberg) Philippine bonds fell on speculation the central bank will refrain from cutting interest rates amid concern costlier oil will stoke inflation. The peso gained.

The yield on the 8 percent debt due July 2031 climbed to a one-month high after Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said yesterday monetary policy will have to deal with inflation should increasing oil costs lead to a “disanchoring of expectations.” The central bank cut its benchmark rate yesterday for a second straight meeting to 4 percent. Crude prices jumped 26 percent in New York in the past six months.
“It looks like we’re seeing the end of rate cuts and bonds may lose support from the BSP’s accommodative policy,” said Jan Briace Santos, a fixed-income trader who helps manage the equivalent of $16 billion at BPI Asset Management Inc. in Manila. [full story…]