BSP Governor Sees Room for More Interest Rate Cuts Despite Economic Slowdown

The Bangko Sentral ng Pilipinas (BSP) may reduce its benchmark interest rate twice more in the remainder of this year, BSP Governor Eli Remolona Jr. said on Thursday. The Philippine economy is experiencing a slowdown, but inflation remains low, giving the central bank room to continue easing its monetary policy. The BSP's Monetary Board has already reduced the target reverse repurchase rate by 25 basis points to 5.25 percent in June, and Remolona sees the possibility of further reductions in the coming months.

Key Takeaways:

• The BSP may reduce its benchmark interest rate twice more in the remainder of 2023, according to Governor Eli Remolona Jr.
• Remolona cited low inflation and slower economic growth as reasons for potential interest rate cuts.
• The BSP's Monetary Board has already reduced the target reverse repurchase rate by 25 basis points to 5.25 percent in June.
• The Philippine economy is experiencing a slowdown due to uncertainty, leading to postponements in big-ticket purchases and investments.
• Exports are also slowing down due to global growth slowdown.
• The BSP is still evaluating whether to keep its target inflation at the range of 2 percent to 4 percent.
• The Philippine Statistics Authority is scheduled to announce the inflation data for June on July 4.
• The inflation rate in May was 1.3 percent, down from 1.4 percent in April.

Statistics:

• Inflation rate in May: 1.3 percent (down from 1.4 percent in April)
• Target reverse repurchase rate in June: 5.25 percent (down from 5.50 percent in May)
• Number of policy meetings scheduled for the remainder of 2023: 3 (August, October, and December)
• Potential interest rate cuts still being evaluated by the BSP: 2

Sources:

• BSP Governor Eli Remolona Jr.
• Bangko Sentral ng Pilipinas (BSP)
• Development Budget Coordination Committee (DBCC)
• Philippine Statistics Authority (PSA)