MANILA, Philippines — A rate cut remains on the table for the central bank’s next policy meeting in August, even as the peso trades at weaker levels against the dollar, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said.
“There’s a meeting in late August, then we have two more (meetings) in October and December,” Remolona told reporters, hinting that the Monetary Board could still trim rates two more times this year.
Asked if a rate cut is possible on Aug. 28, he said: “It’s on the table, yeah. A lot of other data (will) come out.”
The central bank has already slashed interest rates by 125 basis points since August last year, bringing the benchmark rate to 5.25 percent.
Remolona also said the BSP is not overly concerned about the peso’s recent depreciation and the potential inflationary pressures it may cause.
“We don’t have a target for the peso. We’re not concerned with the potential inflationary effects,” he said, noting that the peso at 57 to the dollar is still relatively strong.
The local currency recently slipped past the 57:$1 level last week, tracking weakness across regional currencies amid geopolitical risks and uncertainty over the fiscal policy of the United States.
The BSP chief also noted that further policy easing beyond two more cuts this year is unlikely unless there’s a sharp economic downturn.
“Something very unusual (would warrant a third rate cut this year). Growth has to slow down dramatically,” Remolona said.
On whether the BSP still aims to finish its easing cycle within 2025, Remolona said that would depend on a clearer view of the so-called “Goldilocks” interest rate, a level that neither stokes inflation nor slows growth too much.
“We don’t want to go too much below that. But our estimates of the Goldilocks rate are imprecise, so we have to look at all sorts of other data,” he said.
As for second-quarter gross domestic product, Remolona said market expectations hover around 5.5 percent, and any reading as low as four percent would be unlikely unless there is a significant deterioration in the economy.
The central bank is also closely monitoring global developments, including the impact of the new 19 percent tariff on Philippine exports to the US.
Remolona described the impact on the Philippine economy as “modest,” citing exemptions in several sectors and the country’s relatively limited exposure to global trade.
“We’re not a big trading economy, so that limits the impact on us,” he said. “But growth is already slowing down globally, so that can have some effect.”
As the BSP weighs its next moves, Remolona said future rate decisions would strike a balance between supporting growth and ensuring price stability.
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