Capital Economics: BSP to slash rates further

London-based Capital Economics predicts the Bangko Sentral ng Pilipinas (BSP) will further reduce interest rates by 125 basis points during the first half of the year to mitigate economic impacts from the COVID-19 pandemic.

After Thursday's reduction of 50 bps, Capital Economics Asia economist Alex Holmes expects another emergency rate cut before the BSP's next meeting on May 21.

Holmes anticipates that the policy rate will drop to 2 percent by mid-year and suggests the BSP may implement additional measures to support financial institutions and businesses affected by the pandemic.