By Anant Chandak
BENGALURU (Reuters) – Economists predict the Philippine central bank will lower its key policy rate by 25 basis points in both October and December to boost economic growth, as inflation remains manageable.
With inflation currently at 1.9%, expectations of it returning to the 2%-4% target have influenced the Bangko Sentral ng Pilipinas (BSP) to start cutting rates from August.
All 23 economists surveyed forecast a cut to 6.00% on October 16, followed by another cut to 5.75% in December, with a majority supporting these predictions.
“The decline in inflation supports our view of continued rate cuts,” said Euben Paracuelles from Nomura.
While the U.S. Federal Reserve is expected to cut rates significantly, the BSP is likely to pursue more gradual cuts.
Inflation is predicted to average 3.4% this year and 3.0% in the next, while economic growth is expected to be below the government’s targets.
“Lower rates and reduced inflation should stimulate consumer spending,” noted Gareth Leather from Capital Economics.
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