BSP may implement at least one more rate cut before year-end

Finance Secretary Ralph Recto indicated that the Bangko Sentral ng Pilipinas (BSP) may implement at least one more policy rate cut before the end of the year.

The US Federal Reserve has delivered a rate cut of 25 basis points, lowering its benchmark interest rate to a range of 4.00% to 4.25%, as signs of a cooling labor market outweighed lingering inflation concerns.

The Fed's updated projections now indicate two additional rate cuts are likely this year, up from its previous outlook.

Recto stated that the BSP's decision will be influenced by the monetary policy of the US Federal Reserve and the Philippines' inflation trends.

He suggested a 25 basis point reduction as a 'safe approach' and projected two such cuts at the October and December policy meetings.

BSP Deputy Governor Zeno R. Abenoja stated that inflation this year is projected to average below the target at around 1.7%, and for 2026-2027, it is expected to be within the target range of 2% to 4%.

Abenoja also noted that the central bank is moving towards a 'sweet spot' where interest rates are at the right level to promote growth while controlling inflation.

BSP Governor Eli Remolona Jr. had previously expressed the possibility of another rate cut in October or December, but also noted that the easing cycle might be nearing its end.