By Luisa Maria Jacinta C. Jocson, Senior Reporter
THE Bangko Sentral ng Pilipinas (BSP) could proceed lowering rates of interest at its meeting in August, its top official said.
BSP Governor Eli M. Remolona, Jr. told reporters on Tuesday that a rate cut remains to be “on the table” on the Monetary Board’s next policy review on Aug. 28.
If realized, this might mark the third straight rate cut delivered by the Philippine central bank.
The BSP has to this point reduced borrowing costs by a complete of 125 basis points because it began its easing cycle in August last yr.
Key data releases akin to the second-quarter gross domestic product (GDP) can be available by the subsequent policy meeting, Mr. Remolona noted.
He said he expects GDP to have expanded by “around 5.5%” within the second quarter, which can be barely faster than the 5.4% GDP growth in the primary quarter.
The Philippine Statistics Authority is about to release second-quarter GDP data on Aug. 7.
The federal government is targeting a 5.5-6.5% growth this yr.
The BSP may also proceed easing rates even after the US starts imposing a 19% tariff on goods from the Philippines starting Aug. 1.
Mr. Remolona said the impact of the tariffs on the Philippine economy can be “modest.”
“Globally it’s much clearer now than before. Our issue is more the worldwide spillover effects than the direct effect,” he said.
“A whole lot of sectors are exempt. We’re not an enormous trading economy in order that limits the impact on us.”
The Philippines’ recent US tariff rate is now the identical as Indonesia, and barely lower than Vietnam’s 20%.
Meanwhile, the BSP chief said he’s keeping his outlook for 2 more rate cuts this yr.
After August, the Monetary Board has two remaining meetings scheduled for October and December.
Asked if there was a possibility for a 3rd rate cut, Mr. Remolona said it will take “something very unusual” to warrant this scenario.
A drastic slowdown in growth was also “most unlikely,” he added.
“Growth has to decelerate dramatically… it would depend upon not only the quarterly growth however the prospects.”
Meanwhile, Mr. Remolona said they’re still comfortable with the peso on the P57 level.
“That’s still quite strong,” he said in mixed Filipino and English.
The peso closed at P57.31 per dollar on Tuesday, depreciating by 11 centavos from its P57.20 finish on Monday. This was its weakest close in greater than a month or since its P57.58 close on June 23.
“As you realize, we don’t have a goal for the peso. I’m more concerned in regards to the potential inflationary effects.”