{"id":12382,"date":"2025-05-24T08:30:54","date_gmt":"2025-05-24T06:30:54","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=12382"},"modified":"2025-05-24T08:30:54","modified_gmt":"2025-05-24T06:30:54","slug":"bsp-open-to-two-additional-rate-cuts-this-year-remolona","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/05\/24\/bsp-open-to-two-additional-rate-cuts-this-year-remolona\/","title":{"rendered":"BSP Open to Two Additional Rate Cuts This Year \u2013 Remolona"},"content":{"rendered":"\n

by Luisa Maria Jacinta C. Jocson<\/strong>, Senior Correspondent<\/em><\/p>\n

The Bangko Sentral ng Pilipinas (BSP) indicated the potential for two additional rate reductions this year, according to its leading official, with a rate decrease on the agenda as soon as June.<\/p>\n

\u201cPerhaps two more reductions. Not necessarily back-to-back. Still 25-basis points (bps) at a time, based on what we understand about the current situation,\u201d BSP Governor Eli M. Remolona, Jr. informed reporters during a press conference on Friday.<\/p>\n

\u201cThe challenging aspect is we don’t possess all the answers. This is uncharted territory for most central banks. That\u2019s the most unsettling part,\u201d he further explained.<\/p>\n

The Monetary Board in April lowered benchmark interest rates by 25 bps, adjusting the policy rate to 5.5%.<\/p>\n

The central bank has thus far decreased borrowing costs by a cumulative total of 100 bps since initiating its easing cycle in August of the previous year.<\/p>\n

Mr. Remolona mentioned that a rate reduction is still under consideration at the Monetary Board’s forthcoming policy meeting on June 19.<\/p>\n

\u201cUp to now, the hard data indicates we have ample capacity to lower inflation, particularly because inflation is low,\u201d he added.<\/p>\n

Headline inflation in April dropped to an over five-year low of 1.4%, resulting in a four-month average of 2%.<\/p>\n

Considering risks, the BSP anticipates inflation to average 2.3% this year.<\/p>\n

\u201cHowever, we must exercise caution because we don\u2019t want to cut excessively. If we reduce rates to a point where demand surpasses capacity, that would lead to inflation,\u201d he explained.<\/p>\n

The central bank is expected to keep implementing rate reductions in \u201cbaby steps\u201d or increases of 25 bps.<\/p>\n

\u201cThere\u2019s room for more incremental steps,\u201d Mr. Remolona added.<\/p>\n

There are four remaining Monetary Board policy meetings scheduled for this year in June, August, October, and December.<\/p>\n

\u201cIn the meantime, we\u2019re working on enhancing the transmission mechanism. Thus, a rate decrease may be more effective, somewhat more effective than previously,\u201d he said.<\/p>\n

The BSP is also updating its frameworks and models to more accurately account for global uncertainties.<\/p>\n

\u201cWe\u2019re quite uneasy with our typical analysis, our conventional models\u2026because that framework was created for a different context.\u201d<\/p>\n

\u201cCurrently, we are contemplating various scenarios more rigorously, as our monetary policy will be influenced somewhat by those scenarios,\u201d he said.<\/p>\n

US CREDIT RATING<\/strong>
\nIn the meantime, the BSP chief noted they are contemplating reducing their holdings of US Treasuries to lessen exposure to the US following the recent credit rating downgrade.<\/p>\n

\u201cWe\u2019re examining it. The US is presently rated double \u2018A.\u2019 It\u2019s different when debts of other nations are downgraded. But the downgrading of US Treasuries? That\u2019s significant,\u201d Mr. Remolona remarked.<\/p>\n

Moody\u2019s Ratings last week reduced the US\u2019 long-term issuer and senior unsecured ratings to \u201cAa1\u201d from \u201cAaa,\u201d changing its outlook to \u201cstable\u201d from \u201cnegative.\u201d<\/p>\n

It stated the downgrade \u201creflects the rise over more than a decade in government debt and interest payment ratios to levels that are considerably higher than similarly rated sovereigns.\u201d<\/p>\n

This action stripped the US of its final triple-A rating from the major three credit agencies.
\nIn 2011, S&P Global Ratings downgraded the US\u2019 sovereign long-term credit rating to \u201cAA+\u201d from the highest investment grade of \u201cAAA.\u201d Fitch Ratings in 2023 similarly downgraded the country\u2019s rating to \u201cAA+\u201d from \u201cAAA.\u201d<\/p>\n

\u201cNonetheless, it remains the most liquid market. The dollar continues to be the leading currency regarding international lending, borrowing, and investment,\u201d Mr. Remolona commented.<\/p>\n

\u201cThus, it\u2019s likely to stay a crucial component of our reserves,\u201d he added.<\/p>\n


\n
Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

by Luisa Maria Jacinta C. Jocson, Senior Correspondent The Bangko Sentral ng Pilipinas (BSP) indicated the potential for two additional rate reductions this year, according to its leading official, with a rate decrease on the agenda as soon as June. \u201cPerhaps two more reductions. Not necessarily back-to-back. Still 25-basis points (bps) at a time, based<\/p>\n","protected":false},"author":3,"featured_media":12383,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[2523],"class_list":["post-12382","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy-and-markets","tag-return-a-list-of-comma-separated-tags-from-this-title-bsp-has-room-for-two-more-rate-cuts-this-year-remolona"],"yoast_head":"\nBSP Open to Two Additional Rate Cuts This Year \u2013 Remolona - WSJ-Crypto<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/wsj-crypto.com\/index.php\/2025\/05\/24\/bsp-open-to-two-additional-rate-cuts-this-year-remolona\/\" \/>\n<meta property=\"og:locale\" content=\"it_IT\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BSP Open to Two Additional Rate Cuts This Year \u2013 Remolona - WSJ-Crypto\" \/>\n<meta property=\"og:description\" content=\"by Luisa Maria Jacinta C. 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