BSP seen to cut rates by 25 basis points in June meeting

The Bangko Sentral ng Pilipinas (BSP) is expected to cut policy rates by another 25 basis points in its next meeting in June as inflation has been rather subdued, Fitch Group think tank BMI Country Risk & Industry Research said in a commentary released Monday.

In its report, BMI cited the latest inflation print which clocked in at 1.8% in March, the slowest rate in nearly five years since the 1.6% recorded in May 2020, which could prompt the central bank to continue with its easing.

“This gives the BSP the flexibility for another rate cut, as noted by Governor Eli Remolona, who in a post press conference stated that ‘the more manageable inflation outlook and the risks to growth allow for a shift toward a more accommodative monetary policy stance’,” the report read.

“What we can say with confidence is that the BSP will look for another 25 bps cut at the next meeting scheduled on June 19,” it added.

The Monetary Board of the central bank is scheduled to have four more meetings scheduled this year -- June 19, August 28, October 9, and December 11 — to discuss whether or not a change in key policy settings is warranted.

The BSP last week continued with its policy easing as it cut key policy rates by 25 basis points, and signaled additional cuts this year as inflation forecast risks have decreased and uncertainties have eased after US president Donald Trump paused tariffs on most countries.

In the same report, BMI also noted that “prompt policy support” will be crucial for the country to achieve the lower bound of its 6.0% to 8.0% target range. The economy grew by 5.6% in 2024, marking the second straight year that the Philippines missed its growth target.

“If anything, the case for more easing has strengthened. If negotiations fall through, and a 17.0% tariff on the Philippines is enacted, we will revise our policy rate forecast to pencil in more cuts,” BMI said. — RSJ, GMA Integrated News