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By Luisa Maria Jacinta C. <\/b>Jocson, <\/b><\/span>Senior Journalist<\/i><\/p>\n The Bangko Sentral ng Pilipinas (BSP) may potentially implement another rate reduction later this month, according to its chief official on Monday.<\/p>\n BSP Governor Eli M. Remolona, Jr. indicated that a rate reduction is \u201cquite probable\u201d at the Monetary Board\u2019s upcoming meeting on Aug. 28.<\/p>\n To date, the central bank has reduced borrowing expenses by a total of 125 basis points (bps) since initiating its easing cycle in August of the previous year.<\/span><\/p>\n Should the BSP decrease policy rates this month, it would signify its third consecutive rate cut. In June, the Monetary Board lowered rates by 25 bps, adjusting the benchmark rate to 5.25%.<\/p>\n Mr. Remolona mentioned they are anticipating two additional rate cuts this year.<\/p>\n \u201cI believe two is more probable than one. Two remains more probable,\u201d he stated to reporters at the Economic Journalists Association of the Philippines Economic Forum.<\/p>\n However, he remarked that the chance of three rate cuts is \u201cunlikely.\u201d<\/p>\n \u201cThat would exceed what we regard as the \u2018Goldilocks\u2019 rate and output gap. Our output gap is already limited,\u201d he expressed in mixed English and Filipino.<\/p>\n Earlier, Mr. Remolona indicated that it would require \u201csomething very unusual\u201d to justify a third rate cut this year, like a substantial economic slowdown, which also seems unlikely.<\/p>\n The economy expanded by an annual 5.5% in the second quarter, bolstered by a resurgence in agricultural production and increased household spending.<\/p>\n For the first half of the year, gross domestic product (GDP) growth averaged 5.4%, which is slower than the 6.2% the previous year. The government is aiming for a GDP growth of 5.5-6.5% this year.<\/p>\n Following the Aug. 28 meeting, the BSP will hold two additional policy sessions before the conclusion of 2025.<\/span><\/p>\n Meanwhile, Mr. Remolona stated that inflation is projected to remain well within target this year.<\/p>\n \u201cRegarding inflation, we anticipate reaching 2% in 2025,\u201d he remarked.<\/p>\n \u201cThat\u2019s considerably better than other emerging markets, which might hit 3.1%, and other developed economies, which we expect will reach 3.3%. Thus, (the Philippines will experience) lower inflation compared to advanced economies and emerging markets.\u201d<\/span><\/p>\n Headline inflation significantly decreased to a near six-year low of 0.9% in July, marking the fifth consecutive month that inflation remained below the central bank\u2019s 2-4% target band. <\/span><\/p>\n In the first seven months of the year, inflation averaged 1.7%.<\/p>\n \u201cReviewing our projections, we believe our inflation target remains attainable. I think we still have work ahead of us,\u201d Mr. Remolona stated.<\/span><\/p>\n The BSP expects headline inflation to average 3.3% and core inflation at 3.1% in 2027.<\/p>\n \u201cBoth are within our targeted range. We hope to achieve that. I believe it would aid in stabilizing the economy, fostering investment, and supporting lending by our banks,\u201d he added.<\/p>\n PESO PERFORMANCE
\n<\/b>In the meantime, the BSP chief mentioned they are not overly concerned about the peso\u2019s recent performance. <\/span><\/p>\n