BSP Governor Eli Remolona Jr. hinted at a possible interest rate cut as early as August, citing the recent inflation uptick not being as severe as expected. The Monetary Board decided to keep the policy interest rate unchanged at 6.5 percent, marking the fifth consecutive meeting without a change.
Remolona mentioned the possibility of two rate cuts totaling 50 basis points in the second half of the year, even suggesting that the BSP may ease before the US Federal Reserve. The decision to maintain the current rate was in line with economists’ expectations, given the slight increase in inflation to 3.8 percent in April.
The BSP’s more dovish stance is in response to the weaker economic growth and tight financial conditions. While inflation is expected to remain elevated in the coming months, experts predict a fall in the second half of the year due to increased agricultural product supply and more favorable base effects.
