Huge Fed rate cut gives BSP room to follow suit

The Bangko Sentral ng Pilipinas (BSP) has more room to cut interest rates by 25 basis points at its meeting next month after the US Federal Reserve lowered its policy rates by half a percentage point.

- KEISHA TA-ASAN

Metrobank chief economist Nicholas Antonio Mapa said the interest rate differential between the Philippines and the US is now at 125 basis points, giving the BSP space to cut again next month.

“The BSP has more than enough space to cut the target reverse repurchase rate (RRP) by 25 basis points in October, with September inflation possibly dipping to 2.3 percent,” Mapa said in a social media post.

He added that the timing of cuts may also become an issue if the Monetary Board pauses next month, as the US Fed has two scheduled meetings before the BSP meets in December. The Fed will meet on Nov. 6 to 7 and on Dec. 17 to 18 to discuss policy.