BSP rate cut seen likely as inflation cools

Amid slower economic growth and muted inflation, another 25-basis-point (bp) reduction in the key interest rate to 4.5 percent from the current 4.75 percent is widely expected next week, according to Dutch financial giant ING.

- 

"Recent GDP [gross domestic product] numbers raise concerns that soft government spending could become a longer-term drag, weighing not only on fiscal outlays but also on business and private-sector sentiment," ING Asia-Pacific research head Deepali Bhargava and greater China chief economist Lynn Song said in a Dec. 5 report.

To recall, third-quarter GDP growth fell to a 4.5-year low of four percent in the aftermath of the flood-control scandal, which tempered spending on public goods and services amid a corruption probe.

"While agriculture and private consumption are likely to rebound in the fourth quarter, investment and public spending may remain muted, keeping overall growth subdued," ING said.