The monetary authorities are projected to execute a follow-up interest rate cut when the policy-making monetary board of the Bangko Sentral ng Pilipinas (BSP) meets on Thursday this week.
This was the considered view of some economists and experts whose combined analysis indicated a 50 basis point cut in the rate at which the Bangko Sentral borrows from the banks. Such development will bring the BSP’s borrowing rate lower to 5.25 percent instead of 5.50 percent at the moment.
According to analysts at Moody’s Analytics, for instance, the Philippines joins other countries around Asia and the Pacific in revisiting their monetary policy structures against a background of weak economic data and little or no progress in US trade discussions with Japan, for example, or with China, for another.
Particularly for the Philippines, the Bangko Sentral allowed the benchmark interest rate to drop by 25 basis points to 5.25 percent when the monetary board met in April to help support the economy against continued rising global trade and political tensions that have raised concerns over a broader economic slowdown.
Local output expansion across the Philippines, more known and measured as its gross domestic product (GDP), grew by a revised 5.7 percent last year, or lower than target due to weather-related disruptions that drained the potential from consumer spending which is a key growth driver.
To optimize the growth potential, the BSP also reduced its overnight deposit and lending rates to 5 percent and 6 percent, respectively.
The interest rate reduction in April was in keeping with market consensus at the time and aided in part by easing inflation that averaged lower than the target 2 to 4 percent percent for the year of only 1.8 percent.
The Bank of Japan and Bank Indonesia are two other central banks revisiting their respective interest rate structures with the Philippines this week.
