By Luisa Maria Jacinta C. Jocson, Senior Journalist
THE Bangko Sentral ng Pilipinas (BSP) may persist in diminishing interest rates during its assembly in August, according to its lead official.
BSP Governor Eli M. Remolona, Jr. informed journalists on Tuesday that a reduction in rates remains “on the agenda” for the Monetary Board’s forthcoming policy assessment on Aug. 28.
If this occurs, it would represent the third consecutive rate cut enacted by the Philippine central bank.
The BSP has thus far decreased borrowing expenses by a cumulative 125 basis points since initiating its easing cycle in August of the previous year.
Crucial data releases, such as the gross domestic product (GDP) for the second quarter, will be made available by the next policy meeting, Mr. Remolona observed.
He projected GDP growth to be “approximately 5.5%” for the second quarter, which would be marginally swifter than the 5.4% GDP expansion in the first quarter.
The Philippine Statistics Authority is scheduled to publish second-quarter GDP figures on Aug. 7.
The government aims for growth between 5.5-6.5% this year.
The BSP may also persist in lowering rates even after the US begins implementing a 19% tariff on products from the Philippines starting on Aug. 1.
Mr. Remolona indicated that the effect of the tariffs on the Philippine economy will be “moderate.”
“On a global scale, the situation is much clearer now than before. Our challenge lies more in the global spillover impacts than in the direct influence,” he stated.
“Numerous sectors are exempt. We are not a large trading economy so the impact on us is limited.”
The Philippines’ new US tariff rate is currently aligned with Indonesia, and slightly beneath Vietnam’s 20%.
In the meantime, the BSP head mentioned that he maintains his forecast for two additional rate cuts this year.
Post-August, the Monetary Board has two remaining sessions planned for October and December.
Inquired if a third rate cut was possible, Mr. Remolona replied that it would require “something highly unusual” to justify this situation.
A significant decline in growth was also “extremely unlikely,” he added.
“Growth needs to decelerate dramatically… it will depend on not just the quarterly progress but also the outlook.”
Meanwhile, Mr. Remolona mentioned they remain confident with the peso at the P57 level.
“That’s still fairly strong,” he remarked in a blend of Filipino and English.
The peso concluded at P57.31 per dollar on Tuesday, weakening by 11 centavos from its P57.20 rate on Monday. This was its weakest closing in over a month or since it reached P57.58 on June 23.
“As you are aware, we do not have a specific target for the peso. I’m more focused on the potential inflationary repercussions.”