Monetary Board’s Diokno sees more easing as graft woes weigh

THE PHILIPPINE central bank may cut its key interest rate again in December and further next year, as the economic fallout from a corruption scandal may linger through the end of 2026, an official said.

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"I would expect another 25-basis-point cut" at the next meeting in December, Bangko Sentral ng Pilipinas (BSP) Monetary Board member Benjamin E. Diokno said in an interview with Bloomberg Television's Avril Hong on Monday.

Further rate cuts are possible "maybe sometime next year," as policymakers assess economic growth and employment data, with inflation under control, according to Mr. Diokno.

The BSP reduced its benchmark interest rate by a quarter point this month as a corruption scandal in the government's flood control projects has threatened the country's economic outlook. Its next rate-setting meeting is scheduled for Dec. 11.

Mr. Diokno, who once helmed the central bank as well as the finance and budget departments, said the economy may "slow down a bit" due to the corruption controversy and trade uncertainties. He said 2026 will be "a transition period" as President Ferdinand R. Marcos, Jr. fixes the problem.

In July, Mr. Marcos exposed corruption in flood control projects worth billions of pesos. Many of the projects were either substandard or nonexistent, leading to investigations that have implicated key public works officials and several lawmakers, who have denied wrongdoing. The allegations fueled a broad exit by foreign investors in the stock market.

"We will probably be able to recover from this mess by the end of next year. And in 2027 and 2028, we'll be back on track," Mr. Diokno said.