Federal Reserve move key to BSP rate cut — Finance chief

THE Bangko Sentral ng Pilipinas (BSP) may deliver one more policy rate cut before year-end, but the move could depend on whether the US Federal Reserve lowers borrowing costs in its meeting this week, Finance Secretary Ralph G. Recto said on Tuesday.

- Aubrey Rose A. Inosante Reporter

Mr. Recto, who sits as a member of the BSP’s Monetary Board, told reporters the central bank is weighing the likelihood of the Fed's first rate reduction this year and its implications for global capital flows.

“(This) depends on what happens in the US as well with the Fed,” he said. “{It] depends of course on our inflation numbers. But clearly, I think we can reduce the policy rate by another 25 basis points (bps).”

The Finance chief projected that the BSP might still implement two “safe” cuts of 25 bps each at its policy meetings on Oct. 9 and Dec. 11.

The BSP resumed monetary easing after inflation cooled within its 2-4% target, though a recent uptick in August could complicate its policy path.

Inflation averaged 1.7% in the first eight months, matching the BSP’s full-year forecast. The Philippine Statistics Authority will release September inflation data on Oct. 7.