Nomura sees 60% chance of BSP 4th consecutive rate cut

Nomura Global Markets Research forecasts that the Bangko Sentral ng Pilipinas (BSP) may implement a fourth consecutive 25 basis point (bps) rate cut on Thursday, October 9th, to support the economy amid benign inflation.

This move would lower the policy rate to 4.75%, as the current inflation outlook permits the BSP to prioritize domestic demand which faces increasing downside risks.

While Nomura assigns a 60% probability to a rate cut, they acknowledge a 40% chance of the BSP maintaining current rates due to previous "Goldilocks" signals and a potential wait-and-see approach.

This assessment contrasts with a BusinessWorld poll where 10 out of 16 analysts expect a pause due to emerging inflation risks.

The BSP's policy rate currently stands at five percent following significant cuts since August 2024, with cumulative reductions reaching 150 bps.

Economists like Ruben Carlo Asuncion of Union Bank and Jonathan Ravelas of Reyes Tacandong & Co. also anticipate a 25 bps cut this week, with Asuncion projecting further easing by early 2026.