BSP may pause rate cuts amid peso weakness

The Bangko Sentral ng Pilipinas (BSP) may opt for a temporary pause in cutting borrowing costs next month if the Philippine peso weakens further against the US dollar, according to economists.

-  KEISHA TA-ASAN

Aris Dacanay, economist for ASEAN at HSBC Global Research, said he expects inflation to average below three percent in 2025, giving the BSP room to continue its easing cycle in December. But, there is one risk worth flagging.

"If the peso weakens against the dollar due to global events, such as the US election, the BSP may opt to briefly pause its easing in December to give itself some flexibility if financial markets were to remain volatile," he said.

After bouncing back to the 55 to $1 level in early September, the peso has weakened considerably and breached the 58 to $1 level again in October amid market uncertainties.