(FILE PHOTO) The Bangko Sentral ng Pilipinas daily tribune file photo
BUSINESS

2 more BSP rate cuts loom — economists

Aside from global economic uncertainties stemming from Trump tariffs, Remolona warned of possible elevated prices of transport, utility and meat

Kathryn Jose

Economists expect the Bangko Sentral ng Pilipinas (BSP) to cut its policy rate further by 50 basis points toward 5 percent this year due to easing inflation and slower economic growth last year.

Security Bank chief economist Angelo Taningco said the BSP might ease its policy rate in June and August by 25 basis points each from the existing 5.5 percent.

“The reason is to support economic growth amid manageable inflation and growth headwinds from global trade war,” he said.

Last week, the BSP loosened its policy to 5.5 percent from 5.75 percent after overall inflation in March slowed faster to 1.8 percent than the Central Bank’s minimum target of 2 percent.

The decline was mainly brought by cheaper rice, transport, and restaurant and accommodation services, according to the Philippine Statistics Authority.

Tariff blitz freeze

BSP Governor Eli Remolona Jr. announced the lower policy rate also after US President Donald Trump ordered to delay the implementation of higher tariffs on US imports for 90 days.

HSBC economist for Southeast Asia Aris Dacanay also projects two more BSP rate cuts of similar size for the rest of the year. However, he said these might occur later in August and December.

While there are four Monetary Board meetings left this year, Dacanay said Remolona conveyed non-consecutive policy cuts during the Board’s meeting last week due to some inflationary risks.

Aside from global economic uncertainties stemming from Trump tariffs, Remolona warned of possible elevated prices of transport, utility and meat.

Union Bank of the Philippines chief economist Carlo Asuncion expects one more BSP rate cut of 25 basis points to 5.25 percent by year-end.

However, he said further reductions are possible if economic growth in the first quarter “plunges by more than expected.”

“We believe the urgency to fast-track rate easing remains because the real interest rate setting for us is still a huge disincentive to broad spending, particularly in the rollout of more private investments that create income and jobs,” Asuncion said.

Taningco forecasts at least 5.6 percent economic growth for that period, relatively stable from 5.7 percent growth seen in the last quarter of 2024 based on national statistics.