'BSP has room for one more policy rate cut'

Analysts expect the Bangko Sentral ng Pilipinas (BSP) to deliver one more rate cut this year after the Monetary Board trimmed its policy rate by another 25 basis points (bps) to five percent last week.

- KEISHA TA-ASAN

In a note, BMI Country Risk & Industry Research said the BSP has space to further ease as inflation remains subdued and growth momentum is softening.

"We maintain our forecast for another 25-basis-point cut in the fourth quarter. While near-term price pressures from the rice import ban and higher electricity prices are likely, we still expect inflation to remain below the lower bound of BSP's two to four percent target range," BMI said.

The Fitch Group unit noted that the peso has held up despite the narrowing rate differential with the US Federal Reserve, but cautioned that a sharper global slowdown could trigger outflows from emerging markets.