BSP Sees 2 More Rate Cuts This Year

The Bangko Sentral ng Pilipinas (BSP) is penciling in two more 25-basis-point rate cuts this year as inflation is expected to stay low, but global and political uncertainties continue to weigh on the outlook.

- By KEISHA TA-ASAN

In a press chat yesterday, BSP Governor Eli Remolona Jr. said a 25-basis-point rate cut is "on the table" for the Monetary Board's June 19 meeting, with room for at least one more later this year, both seen as "baby steps" amid the current economic climate.

"Maybe two more rate cuts this year," Remolona told reporters, adding that the adjustments would not necessarily come back-to-back and would remain at 25 basis points each as the BSP navigates what he called "uncharted territory" for most central banks.

Asked about the factors that could prompt the BSP to cut more or less, Remolona said: "That's the hardest part — we don't really know. This is a new environment for all of us. That's what makes us most uncomfortable."

He also said that a larger 50-basis-point reduction would signal that the central bank is reacting to deeper concerns in the economy.

"That means we're worried about something," the BSP chief said. "Right now, we're just very uncomfortable with our usual models, which were designed for a different environment."