MONETARY authorities can order two more rate cuts this year amid an improving inflation outlook, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said on Wednesday.
With policy meetings scheduled in October and December, “25-25 (two cuts of 25 basis points each) is possible in principle,” he told reporters at the sidelines of an Asia Development Bank (ADB) event.
The BSP’s policymaking Monetary Board cut key interest rates by 25 basis points (bps) last month to 6.25 percent. This was overshadowed, however, by the US Federal Reserve’s slashing its policy rate by 50 bps last week.
The US central bank, which also has two more meetings left for 2024, indicated that it could also announce two 25-bps cuts to cap the year.
Remolona, who earlier said that one more rate cut could be ordered this year, told reporters that the “numbers keep coming in” and had raised the possibility of two more rate cuts.
Finance Secretary Ralph Recto, a member of the Monetary Board, on Tuesday said that the central bank could match the Fed’s 50-bps cut.
While the finance chief did not mention whether it would be a single 50-bps cut or two 25-bps reductions, Remolona said a 50-bps cut in one meeting was unlikely as it would raise the “risk of hard landing.”
“We have to look at the numbers. The last number that we get [before the October meeting], the September number that will be released next week, feeds into our projections,” Remolona added.
“[W]hat we care about is the projection for one year from now, because the effect of monetary policy is slow, so that’s the relevant number,” he added.
The BSP chief said that there was a possibility that inflation would go lower than last month’s 3.3 percent.
Most analysts are expecting lower than 3.0-percent inflation this month due to lower rice import tariffs implemented in July.
The Philippine Statistics Authority will release the September inflation report on October 4, Thursday.
The BSP, meanwhile, will issue its forecast for the month on Monday, September 30.
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