Trade war may spur interest rate action

The Bangko Sentral ng Pilipinas (BSP) is expected to finally push through with its awaited reduction in key interest rates to protect the economy from the likelihood of a wider negative outlook given no thanks to United States (US) President Donald Trump's reciprocal tariffs.

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In an April 4 report sent to journalists on Tuesday, April 8, Deutsche Bank Research said the April 10 BSP Monetary Board policy meeting will likely yield a 25 -basis point (bp) rate cut.

"Inflation in March of 1.8 percent year-on-year breached the BSP's lower limit, and the central bank ear-lier also expected the negative output gap to persist until end-2026," the research arm of investment giant Deutsche Bank noted.

According to Investopedia, a negative output gap "suggests that actual economic output is below the economy's full capacity for output."