Low inflation, weak growth point to fresh BSP rate cut

Another 25-basis-point (bp) interest rate cut by the Bangko Sentral ng Pilipinas (BSP) is widely expected at its monetary policy meeting next month, as inflation slides and economic growth weakens.

- BY BEN ARNOLD DE VERA

In a May 9 report, Deutsche Bank Research said the lower-than-expected 5.4-percent gross domestic product (GDP) growth in the first quarter, coupled with the over five-year-low 1.4-percent headline inflation rate in April, "strengthens our conviction of another 25-bp rate cut in the BSP's June meeting."

Deutsche Bank Research noted that Bloomberg quoted BSP Governor Eli M. Remolona Jr. as saying last week that up to 75 bps in rate reductions are possible for the rest of the year, bringing the policy rate down to 4.75 percent from 5.5 percent.