BSP: August rate cut 'quite likely'

THE Bangko Sentral ng Pilipinas (BSP) could possibly deliver another rate cut later this month, its top official said on Monday.

- By Luisa Maria Jacinta C. Jocson Senior Reporter

BSP Governor Eli M. Remolona, Jr. said a rate cut is “quite likely” at the Monetary Board’s next meeting on Aug. 28.

The central bank has so far lowered borrowing costs by a total of 125 basis points (bps) since it began its easing cycle in August last year.

If the BSP lowers policy rates this month, this would mark its third straight rate cut. In June, the Monetary Board cut by 25 bps to bring the benchmark rate to 5.25%.

Mr. Remolona said they are expecting to deliver two more rate cuts this year.

“I think two is more likely than one. Two is still more likely,” he told reporters on the sidelines of the Economic Journalists Association of the Philippines Economic Forum.

However, he noted that the possibility of three rate cuts is “unlikely.”

“That would overshoot what we look at as the ‘Goldilocks’ rate, output gap. Our output gap is already small,” he said in mixed English and Filipino.

Mr. Remolona had earlier said that it would take “something very unusual” to warrant a third rate cut this year, such as a drastic slowdown in growth, which was also unlikely.