Philippine finance head sees 100 basis points rate cuts in 2024
PHILIPPINE Finance Secretary Benjamin Diokno estimates that the central bank can cut its benchmark interest rate by a total of 100 basis points this year as inflation cools to within the 2 to 4 per cent target.
Bangko Sentral ng Pilipinas’ (BSP) target reverse repurchase rate may fall to 5.5 per cent by the end of the year from the current 6.5 per cent, Diokno told Bloomberg Television on Monday (Jan 8). Monetary easing may start from the second half of the year, said the finance chief who sits in the policymaking Monetary Board.
“A 75-basis-point cut by the Fed this year could actually be matched by the central bank, or it could be even 100 basis points,” Diokno said. “Right now, the policy rate is at 6.5 per cent, so I see something like 5.5 per cent by the end of 2024. The timing of course, will be, as I said, data-dependent.”
The Philippines’ borrowing cost is at a 16-year high, after the BSP’s most aggressive monetary tightening campaign in two decades to rein in stubborn inflation. While consumer prices eased to 3.9 per cent from a year ago in December, the slowest in 22 months, rice costs remain volatile and recently gained the most in 15 years. BLOOMBERG
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