BSP to cut policy rate anew - poll

THE BANGKO SENTRAL ng Pilipinas (BSP) is widely expected to ease for a fifth straight meeting on Thursday as economic growth slows and inflation remains below target, analysts said.

- By Katherine K. Chan

A Business World poll conducted last week showed that 17 out of 18 analysts surveyed expect the Monetary Board to cut the target reverse repurchase rate by 25 basis points (bps) on Dec. 11. This is the board's last policy review meeting of the year.

If realized, the benchmark rate will fall to 4.5% from the current 4.75%. At 4.5%, this would be the lowest policy rate in over three years or since the 4.25% in September 2022.

In the BusinessWorld poll, only one analyst, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco, sees the BSP delivering a 50-bp cut.

The central bank has so far reduced borrowing costs by a cumulative 175 bps since it began its easing cycle in August last year. It delivered a 25-bp cut at each of its meetings in April, June, August and October.

Moody's Analytics Assistant Director and Economist Sarah Tan said the dismal third-quarter growth and easing inflation print may prompt a 25-bp rate cut on Thursday.

"Weaker-than-expected third-quarter GDP (gross domestic product) growth and a low-inflation environment together strengthen the case for further easing, even as risks of stronger price pressures linger," she said in an email. "These forces should outweigh concerns about the peso's recent depreciation."

In the July-to-September period, the Philippine GDP expanded by 4%, its slowest pace since the first quarter of 2021, as consumer and investor sentiment waned amid the ongoing public infrastructure corruption mess.

The country's economic growth averaged 5% in the nine-month period, below the government's 5.5-6.5% target for 2025.

Cid L. Terosa, a senior economist at the University of Asia and the Pacific, said the BSP will likely deliver a 25-bp cut in light of slowing economic growth both here and abroad, as well as a weaker pace of household spending.