BSP may cut rates in June, August

THE BANGKO SENTRAL ng Pilipinas (BSP) is likely to cut policy rates by 25 basis points (bps) each this month and in August, as inflation settles below the 2-4% target this year, Deutsche Bank said.

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"Our base case is for 25-bp rate cuts in the coming June and August meetings," Deutsche Bank Research Economist Junjie Huang said in a report.

The Monetary Board resumed its rate-cutting cycle in April, reducing the benchmark rate by 25 bps to 5.5%. The central bank has lowered borrowing costs by 100 bps since it started easing in August last year.

Deutsche Bank said the risk of inflation breaching the central bank's 2-4% target “remains limited.”

"Full-year inflation in 2025 is at risk of coming below BSP's 2-4% target range," it said. “We had recently downgraded our forecast to 1.9% from 2.4%.”

The BSP expects inflation to average 2.3% this year. Headline inflation slowed to 1.4% in April, bringing the four-month average to 2%.

Inflation was 1.3% last month, according to a median estimate of 17 economists in a