According to recent reports, the Philippine Central Bank will cut its interest rate by 25 points in October and December. The bank decided to support economic growth, as economists expected inflation to stay under control.
The governor of BSP (Philippine Central Bank), Eli Remolona, revealed that a 25 bps reduction would be the norm if the economy were not poised for a hard landing.
All 23 economists in the Reuters poll expect BSP to cut its overnight borrowing rate by 25 basis points to 6.00% on October 16. The median forecast reveals that this will be followed by another quarter-point cut to 5.75% in December. 16 out of 21 economists expect the policy rate to remain at 5.75%, 4 expected it at 6.00%, and one economist at 5.50%.
The Chief ASEAN economist, Euben Paracuelles, shared, “The decline in headline inflation reinforces our view that the BSP will continue to cut rates this year after kicking off its easing cycle early. We reiterate our forecast for BSP to cut by 25 bps at each of the two meetings of the year.”
The U.S. Federal Reserve Bank was expected to reduce rates by 150 bps by the end of 2025, and the Philippine Central Bank was forecasted to match its American counterpart in cumulative cuts. Meanwhile, inflation was anticipated to stay close to 3.0% and 3.4%, which is the central bank’s mid-point target. Economic growth is expected to average 5.8% to 5.9% this year and next year.
