BSP Likely to Cut Policy Rate Anew

The Bangko Sentral ng Pilipinas (BSP) is widely expected to cut its benchmark interest rate by another 25 basis points this week, as analysts cite benign inflation, tepid economic growth and a stable exchange rate.

- By KEISHA TA-ASAN

The BSP's Monetary Board, which has so far slashed borrowing costs by a total of 100 basis points since August last year, is set to meet for the third time this year on June 19.

Economists believe the BSP has enough room to lower the key policy rate to 5.25 percent from the current 5.5 percent amid easing price pressures and sluggish first-quarter gross domestic product (GDP) performance.

"We expect the BSP to cut the policy rate by 25 basis points on June 19, supported by below-target headline inflation, stable core inflation and a manageable exchange rate," Jun Neri, lead economist at Bank of the Philippine Islands, said.

Neri said that inflation is still projected to stay within the BSP's two to four percent target range even if favorable base effects fade later this year. The central bank may also be inclined to support economic growth, which has underperformed expectations.