Analysts still divided on August rate cut

Economists are still divided on whether the Bangko Sentral ng Pilipinas (BSP) has room to start its widely anticipated policy easing cycle in August, as some argue that the Philippines is still not out of the woods.

- KEISHA TA-ASAN

Gareth Leather, senior Asia economist at Londonbased Capital Economics, said that while the BSP left policy rates unchanged on June 27, BSP Governor Eli Remolona Jr. dropped clear hints that rate cuts are coming soon.

"Given the dovish language from the central bank, we are sticking with our view that the BSP will cut rates at its next meeting in August, with further cuts to follow," Leather said.

"Overall, we are expecting 75 basis points of rate cuts this year, which makes us more dovish than the consensus," he added.

According to Leather, the Philippine economy is in need of support as it slowed to 5.7 percent in the first quarter, lower than the 6.4 percent a year ago and below the government's six to seven percent goal.

"With fiscal policy being tightened, interest rates at multi-year highs and exports likely to struggle, we expect growth to remain weak," he said.