Deutsche Bank sees 25-bp cut in Feb.

THE BANGKO SENTRAL ng Pilipinas (BSP) might deliver a sixth straight rate cut at its first policy meeting next year as weak domestic and external economic prospects could drag growth, Deutsche Bank Research said.

- Katherine K. Chan

It said in its latest Asia Week Ahead report released on Monday that the Monetary Board (MB) could go for another 25-basis-point (bp) cut as early as its February review on expectations of a prolonged economic slowdown.

“[The] weakened — or still weakening — domestic economic outlook on the back of governance issues and the possible dampening of external trade activity as tariffs bite could justify further rate cuts to support growth, especially as fiscal policy remains constrained,” it said. “We maintain our view that BSP would cut 25 bps again in its next MB meeting.”

“Governor Remolona’s shift of views between hawkish (end of easing) and slightly dovish (maybe one more rate cut) during the Monetary Board press briefing and subsequent media interviews suggests the still-high degree of uncertainty on the economy, in our view.”

Last week, the Monetary Board lowered benchmark borrowing costs by 25 bps for a fifth meeting in a row to bring the policy rate to 4.5%, the lowest in over three years.