Cut amid uncertainty

Math of the midterm election showed surpris-ing upsets—

- By Dexter Barro II

In the aftermath of the midterm election that showed surpris-ing upsets—and despite the prevail-ing uncertainty sur-rounding the United States’ (US) tariffs—the domestic market is gearing up for a possible interest rate cut by the Bangko Sentral ng Pilipinas (BSP).

Talks going around the mar-ket suggest there’s enough room for the BSP to bring down its key in-terest rate by 25 basis points (bps), which would narrow the interest rate differential to 75 bps, in its policy meeting this coming June.

Yes, Virginia, the BSP will be ahead of the curve relative to the US Federal Reserve, which has placed rate reduc-tions on hold, waiting to see how the tariff war pans out.

As US Fed Chair Jerome Powell puts it: “For the time being, we are well positioned to wait for greater clarity before consid-ering any adjustments to our policy stance.”