The Bangko Sentral ng Pilipinas (BSP) is contemplating reducing interest rates later in the year, anticipating a slowdown in inflation during the latter part.
BSP Governor Eli M. Remolona Jr. said that the Monetary Board has sufficient time to deliberate on reducing the current 6.5 percent target reverse repurchase (RRP) rate. While a rate cut is envisioned in the fourth quarter as a “central scenario,” the Monetary Board is open to postponing it until the first quarter of 2025 if deemed necessary.
Potential geopolitical tensions, such as the ongoing conflict in the Middle East, could impact inflation. However, Remolona played down their immediate effects, citing temporary oil price fluctuations and deeming a significant escalation in hostilities improbable.
This marks a departure from Remolona’s earlier remarks in April, where he hinted at a potential rate cut as early as the third quarter. The final decision will be contingent on inflation and economic growth indicators.
The BSP maintained its inflation projections of 4 percent for 2024 and 3.5 percent for 2025, both falling within the target range of 2 percent to 4 percent.
