BSP may cut rates by up to 100 bps in Q4

The Bangko Sentral ng Pilipinas (BSP) may cut interest rates by a total of 100 basis points (bps) in the last three months of 2024, according to Fitch Solutions' unit BMI.

BMI projects that the Fed will reduce rates by a total of 125 bps this year, providing the BSP with more room to ease aggressively.

The research group now expects the Monetary Board to deliver a 50-bp cut on October 16 and another 25-bp cut on December 19.

Easing inflation and high interest rates are driving policy makers to unwind restrictive settings to bolster economic growth, with the economy growing by 6.3% in the second quarter but facing challenges sustaining investment activity.

BMI forecasts that the terminal rate will settle around 4.5%, representing 200 bps worth of cuts from the peak to the trough.