Economists mixed on BSP's next move

While most economists expect the Bangko Sentral ng Pilipinas to cut interest rates by 25 basis points at its meeting on Thursday, some believe the Monetary Board – the BSP’s policy-setting body – will keep rates unchanged.

- KEISHA TA-ASAN

UnionBank chief economist Ruben Carlo Asuncion said the BSP may delay its widely anticipated rate cut as gross domestic product (GDP) growth accelerated to 6.3 percent year on year in the second quarter.

“The BSP may decide to cut (in October), in line with the (US) Fed’s schedule,” he said.

Asuncion also said an off-cycle rate cut from the Philippine central bank would be possible if the Federal Reserve starts cutting borrowing costs in September.

“We are expecting a modest 25-basis-point cut if the BSP does proceed with the off-cycle rate cut,” Asuncion added.

Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said inflation rising to 4.4 percent in July and breaching the four percent upper limit of the BSP’s target would be enough for the Monetary Board to push the hold button.

“I suspect that this breach will be enough to continue keeping the Monetary Board’s hand, so we’ve had to delay our forecast for the first 25-basis-point rate cut to the October meeting, from this month,” he said.