Moody’s think tank: No BSP rate cut soon By Bianca Cuaresma
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@BcuaresmaBM
HE Bangko Sentral ng Pilipinas (BSP) is expected to keep its key rates unchanged in its first monetary-policy meeting in 2021. Moody’s Analytics Chief Asia Pacific Economist Steve Cochrane said the BSP has already cut heavily in 2020 and will likely wait for these cuts to take effect in 2021 before cutting further to support the economy. “ T he Phi l ippines’s Centra l Bank is expected to keep its key policy rate unchanged at 2 percent at its February meeting. The domestic health crisis has worsened since then, as have parameters of consumer and business
activity, but with rate cuts worth 200 basis points and a liquidity injection already delivered, the Central Bank has limited options but to wait for the returns from expansionary monetary policy to materialize in 2021, once local restrictions are fully relaxed,” Cochrane said. The current monetary-policy rate of the country at 2 percent is the lowest on record for the economy. This is after the Central Bank cut its rates by a total of 200 basis points in 2020—25 basis points in February, 50 basis points in March, another 50 basis points in an off-schedule Monetary Board meeting in April, another 50-basis-point cut in June and the latest 25-basis-point cut in November—in an effort to curb
the negative effects of pandemicinduced movement restrictions on the economy. In a separate statement, ING Bank economist Nicholas Antonio Mapa also expressed belief that the BSP will hold policy rates steady in its upcoming meeting on February 11 as inflation recently quickened above their target range in January. “[Bangko Sentral Governor Benjamin] Diokno is currently caught between a rock and a hard place with three options laid out before him. A rate cut would be in-line with his recent directive to bolster economic activity but is counter to his price stability objective,” Mapa said. “On the other hand, a rate hike at a time when economic activity
is floundering would knock out the fledgling recovery while establishing only a token effect on price pressures given the nature of the breach,” he added. At that rate, the BSP is left with leaving current monetary-policy conditions unchanged, especially in their February 11 meeting. “A pause would still provide accommodation for the recovery while not feeding any unneeded inflationary pressure. Thus, at this juncture, keeping policy rates unchanged would allow BSP to provide the economy support for the recovery while at t he sa me t i me sa feg u a rd against any budding demand side pressure, which appears to be negligible at the moment,” Mapa said.
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Tuesday, February 9, 2021 Vol. 16 No. 121
P25.00 nationwide | 2 sections 18 pages |
PUSHING PORK IMPORTS ANOTHER INFLATION WORRY: FARM-GATE BROILER PRICE RISES By Jasper Emmanuel Y. Arcalas
@jearcalas
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MEAT and chicken vendors go on pork holiday at Paco Market in Manila as the new Executive Order imposing a price ceiling on pork and chicken products in Metro Manila took effect on Monday. The tight supply, and resulting price spikes of pork—traced to the impact of the African swine fever and typhoons in late 2020—have helped drive high-than-expected inflation rate in January, but some economists dispute the wisdom of imposing price ceilings. ROY DOMINGO
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By Samuel P. Medenilla
@sam_medenilla
HE government is now poised to import more pork products to stabilize its price and supply in Metro Manila and other parts of the country.
This despite ongoing efforts by the Department of Agriculture (DA) to tap hog raisers in the Mindanao and Visayas, which remain unaffected by the African swine fever
(ASF), to address the reported supply shortage of pork in the National Capital Region (NCR). In an online interview with PTV on Monday, Agriculture Sec-
retary William Dar said President Duterte already approved in principle their proposal to increase the Minimum Access Volume (MAV) for pork. “We are now just in the process [of studying the proposal] so we will not be criticized that we did not hold any consultations for it,” Dar said. Last week, Malacañang announced Duterte and the Cabinet approved DA’s recommendation to study raising the MAV from 54,000 metric tons to 164,000 MT. The additional imported pork aims to bring down the price of pork below its current average of
P400 per kilogram (kg).
Pork holiday
THE sudden spike in pork prompted the President to issue Executive Order (EO) 124 imposing a price ceiling for kasim/pigue at P270 per kilo and liempo at P300 per kilo, which will be sold in NCR. The price ceiling, which took effect on Monday (February 8), was opposed by some pork retailers, who claimed it will force them to sell at loss. Many retailers resorted to stop selling pork for the duration of the 60-day EO 124. Continued on A2
OW domestic supply has pushed the farm-gate price of broilers to reach a historic-high of P130 per kilogram, something that the United Broiler Raisers Association (Ubra) said is another cause for concern of faster inflation in the coming months. Latest Ubra price survey as of February 5 showed the average price of off-sized broilers now at P120 per kg; while regular-sized ones are quoted at an average of P124.67 per kg. The group’s latest survey also showed that the average farm-gate price of prime-sized broilers is now at P125.06 per kg. The average prices for all three sizes of broiler are about P5 per kg higher compared to the farm-gate prices observed last January 29, based on Ubra data. Ubra President Elias Jose Inciong told the BusinessMirror that the increase in farm-gate prices reflects the all-time high prices of day-old chicks (DOCs) that have breached the P50 per chick level today. The spike in DOCs is a reflection of the reduction in breeders, as raisers adjusted to the anemic demand for chicken meat last year due to government-induced lockdowns against Covid-19. “DOCs are now at P52 per chick. It was just P14 per chick last September and P28 per chick last October,” Inciong said in a phone call. “Indeed this situation is really a cause for concern for higher meat prices.” Inciong described the government’s price ceiling on chicken meat— P160 per kg— as “not realistic” due to rising input prices that include not only DOCs but also feeds.
Inciong warned that broiler raisers may opt to reduce or stop restocking in the coming weeks due to the price ceiling, which is hard for them to comply with. He explained that the break-even cost now for broiler raisers ranges from P92 to P100 per kg, up from the usual P70 to P78 per kg. “Why will you restock? If you restock today and harvest next month you are still covered by the 60-day price ceiling. You cannot do anything with the selling price especially if input costs continue to increase,” he said. Inciong said they have repeatedly told the government about the eventual tightness in chicken meat supply as early as May 2020. He pointed out that it was a“natural market reaction”for raisers and breeders to cut their production due to low demand last year. He said most members of Ubra have been unable to fill the capacity of their farms due to lack of DOCs. “We have warned Agriculture Secretary William Dar back in May and again in June that once the breeders voluntarily culled their stocks, it would result in a big problem and it would be hard to resolve,” Inciong said. Inciong warned that the farm-gate prices of broilers would continue to rise once farms stop their next cycle of loading which results in tighter domestic supply. The Philippine Chamber of Agriculture and Food Inc. (Pcafi) earlier said inflation would accelerate in the coming months as the government is ill-prepared to deal with the country’s food supply problems. (Related story: https://businessmirror. com.ph/2021/02/08/food-supplywoes-to-put-pressure-on-inflation/)
Consolidated House bill lays down clear tax exemptions for vaccines By Jovee Marie N. dela Cruz
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@joveemarie
HE House Committee on Ways and Means on Monday approved a consolidated substitute bill exempting Covid-19 vaccines from duties and value-
added tax. Although the recently ratified proposed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act already exempts Covid-19 from VAT and from import duties, “there is some room for interpretation on whether the duties
PESO EXCHANGE RATES n US 48.0900
apply to all importers, or only to registered enterprises,” Committee Chairman and Albay Rep. Joey Sarte Salceda said. “That is especially because we were only dealing with duty incentives in that bill. So, we want to make sure vaccines can be im-
ported duty-free and without friction at the ports. That is why we are taking these bills up,” Salceda said. BHW Rep. Angelica Natasha Co, an author of the bill, said public health, public safety, and the economic security require that
all impediments, including cost constraints, to the swift and effective implementation of the vaccination program must be cast aside. “To make all the Covid-19 vaccines affordable and reasonablypriced, [I] propose that all the
vaccines and everything needed in the fight against Covid-19 must be tax-free regardless of country of origin, manufacturer, and whether for the public vaccination program or for private inoculation by a health professional.
n JAPAN 0.4566 n UK 65.9891 n HK 6.2033 n CHINA 7.4369 n SINGAPORE 36.0441 n AUSTRALIA 36.8754 n EU 57.9004 n SAUDI ARABIA 12.8209
Continued on A2
Source: BSP (February 8, 2021)