Housing slump may need jumbo rate cut

Housing construction, which sharply slowed in the second quarter and pulled gross domestic product (GDP) growth toward the lower end of the government’s target, would likely recover only if the Bangko Sentral ng Pilipinas (BSP) delivers a jumbo rate cut on Thursday, Aug. 28.

- DERCO ROSAL

While the University of Asia and the Pacific (UA&P) expects infrastructure activity to pick up in the second half of the year, the residential construction sector is still expected to struggle with challenges from elevated interest rates.

“Residential construction will remain subdued due to the elevated policy and interest rates, unless BSP increases its rate cut to 50 bps in its August 28th meeting from the widely expected 25 bps [basis points] rate cut,” UA&P senior economist Victor Abola and research assistant Marco Antonio Agonia said in a the latest edition of The Market Call published last week.