Deutsche Bank predicts BSP to cut rates by 25bps in June and August

Deutsche Bank forecasts that the Bangko Sentral ng Pilipinas (BSP) will reduce policy rates by 25 basis points in June and August due to inflation below its target range.

The BSP resumed its rate-cutting cycle in April, lowering the benchmark rate to 5.5% from 5.75%, with a total reduction of 100 basis points since August last year.

Deutsche Bank expects full-year inflation for 2025 to be below the BSP's target range due to low rice prices and stable domestic fuel costs, contributing to lower overall inflation.

Headline inflation slowed to 1.4% in April, with rice prices falling by 10.9% after declining 7.7% in March, further supporting the case for rate cuts.

BSP Governor Eli M. Remolona Jr. has indicated that the central bank could deliver two more rate cuts this year, with the next policy review scheduled for June 19 and another expected in August.

Deutsche Bank economist Junjie Huang expects slower economic growth to provide additional justification for further easing measures, while also maintaining a healthy interest rate differential between the BSP and the Federal Reserve.