BSP seen cutting interest rates in Oct

Despite the lower inflation outturn in June, Metropolitan Bank & Trust Co. (Metrobank) expects the Bangko Sentral ng Pilipinas (BSP) to start its gradual easing cycle in October to prevent any depreciation pressure on the peso.

- KEISHA TA-ASAN

In a report, Metrobank’s Research and Market Strategy Department said the lower-than-expected June inflation supports the Bangko Sentral ng Pilipinas (BSP)’s shift to a more dovish tone, increasing the chance of a rate cut on Aug. 15.

“But despite the lower inflation path, we continue to believe the BSP will hold off on cutting policy rates until its Oct. 17 meeting with a 25-basis-point cut, followed by another 25-basis-point cut on Dec. 19, to support the peso,” it said.

If realized, this would bring the BSP’s benchmark interest rate down to six percent from the current 6.5 percent level. The Monetary Board has kept borrowing costs unchanged since it last hiked rates in October 2023.