By Anant Chandak
BENGALURU (Reuters) – The Philippine central bank plans to lower its key policy rate by 25 basis points in both October and December to encourage economic growth, as inflation remains manageable, according to most economists in a Reuters poll.
With inflation expected to return to the Bangko Sentral ng Pilipinas’ (BSP) 2%-4% target, the bank initiated rate cuts in August. Inflation has since fallen to 1.9%, paving the way for more reductions.
Governor Eli Remolona indicated a 25-basis-point cut is likely if the economy remains stable.
All 23 economists surveyed expect the BSP to reduce its overnight borrowing rate to 6.00% on October 16, followed by another cut to 5.75% in December.
“The drop in inflation strengthens our view that the BSP will continue to ease rates this year,” said Euben Paracuelles of Nomura.
While the U.S. Federal Reserve might cut rates by another 150 bps by the end of 2025, the BSP is expected to follow suit.
Inflation is projected to average 3.4% this year and 3.0% next, while economic growth is forecasted at 5.8% this year, falling short of the government’s 6%-7% target.
“With low inflation and sluggish growth, further rate cuts from the central bank are likely,” noted Gareth Leather from Capital Economics.
Lower interest rates and decreasing inflation should help boost consumer spending.
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