Large BSP rate cuts loom - BMI

Following the country's first rate cut in August, BMI Country Risk & Industry Research expects the Bangko Sentral ng Pilipinas (BSP) to slash policy rates further by 50 basis points in October and another 25 basis points in December.

- Keisha Ta-asan

If realized, this will bring the benchmark interest rate down to 5.5 percent by end 2024 from the current 6.25 percent. This is a level last seen when the BSP hiked rates by 50 basis points to 5.5 percent in December 2022.

"The BSP kicked off its easing cycle with a 25-basispoint cut in August, and we expect the BSP to ease more aggressively over the coming months," BMI said in a report.

The BSP cut interest rates by 25 basis points in its August meeting, bringing the key rate to 6.25 percent from 6.50 percent previously. Prior to the cut, the BSP kept its policy rate unchanged for six straight meetings since November 2023.