Foreign banks bet on December rate cut

Foreign banking giants anticipate a pause in the Bangko Sentral ng Pilipinas' (BSP) easing cycle on Thursday, Oct. 9, citing the latest inflation print, which accelerated to its highest level in six months.

- BY DERCO ROSAL

United Overseas Bank (UOB) senior economist Julia Goh and economist Loke Siew Ting said in an Oct. 7 commentary that the September inflation rate of 1.7 percent provides the central bank "with scope to pause at the upcoming Monetary Board (MB) meeting."

Their expectation comes against the backdrop of three interest rate cuts so far this year, which brought the policy rate down to five percent in August.

Singapore-based UOB argued that a pause will "allow the BSP to assess the cumulative impact of prior monetary policy actions on the domestic economy while continuing to monitor external developments."

Japanese financial giant MUFG Bank Ltd., agreeing with UOB's expectation, said in an Oct. 8 report that the central bank still has room for one more reduction in December as inflation is expected to remain subdued.