BSP sees room for rate cuts but wants to assess impact of previous easing

The Bangko Sentral ng Pilipinas (BSP) sees room for further interest rate cuts due to manageable inflation, but the Monetary Board prefers to wait and assess the impact of previous easing measures.

BSP Governor Benjamin E. Diokno indicated that April inflation might settle at two percent, a further decrease from March's 2.5% and continuing a downward trend observed since January.

The BSP now projects inflation to average 2% this year, a reduction from the previous 2.2% estimate, and still within the target range of two to four percent for 2020 and 2021.

Despite the favorable inflation outlook, the BSP is exercising caution as monetary policy adjustments take time to be fully absorbed by the economy.

The Monetary Board has already implemented significant easing measures, including a total of 175 basis points in interest rate cuts, with an off-cycle 50 basis-point cut on April 16.

Additional measures to support micro, small, and medium enterprises (MSMEs) include allowing new loans to them as alternative compliance with reserve requirements and reducing credit risk weights on their loans.

The central bank will continue to monitor market conditions for any emerging risks to inflation and economic growth.