Finance Sec expects 2 more BSP rate cuts this year

Finance Secretary Ralph Recto anticipates two additional policy rate reductions by the Bangko Sentral ng Pilipinas (BSP) this year, each estimated at 25 basis points.

These potential cuts would lower the BSP policy rate from 5.25 percent to 4.75 percent by year-end, supported by the country's relatively low commodity and service prices.

Philippine inflation for the first half of the year averaged 1.8 percent, remaining within the BSP's target range of 2 percent to 4 percent.

Recto expressed confidence in the Philippines' ability to cut rates independently, even if the US Federal Reserve maintains its current rates.

However, Recto indicated that the BSP might implement only one rate cut for the rest of the year if the US Federal Reserve keeps its policy rate elevated.

Economists noted that a significant difference between local and foreign policy rates could deter direct investments and weaken the peso, potentially increasing local inflation.