Cuts to bring key rate to 4% in 2025 - Nomura

Risks are skewed toward more policy easing in the Philippines for the next two years as the Bangko Sentral ng Pilipinas BSP) could cut interest rates by 125 basis points this year and another 125 basis points in 2025, Nomura Global Markets Research said.

- KEISHA TA-ASAN

If realized, this would bring down the country’s benchmark interest rate to 5.25 percent this year and four percent next year.

Nomura chief economist Sonal Varma and Asian economist Si Ying Toh said the research firm’s modified Taylor rule (MTR) showed that the Philippines has the potential for larger than-expected rate cuts in the next two years compared to its baseline forecasts.

“The MTR suggests policy easing should begin in the third quarter of 2024, with 250 basis points of cumulative cuts to a terminal rate of four percent by 2025,” Varma and Toh said.