Philippine central bank signals August rate cut

[MANILA] The Philippine central bank signalled on Monday (Aug 11) that it may deliver the first of two remaining interest rate cuts this year at its Aug 28 policy meeting as inflation remained subdued.

Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said that it was “quite likely” the bank would lower its key policy rate later this month, reiterating its easing bias to support growth amid global uncertainties and as inflation continues to slow.

“Things look good,” Remolona told a forum organised by the Economic Journalists Association of the Philippines, adding that inflation could fall to 2 per cent this year, the bottom of the BSP’s target range.

Cooling prices have underpinned domestic demand, with the economy expanding 5.5 per cent in the second quarter, slightly faster than the 5.4 per cent growth in the previous quarter. Annual inflation eased to 0.9 per cent in July, the lowest since October 2019, bringing the year-to-date average to 1.7 per cent.

Remolona told Reuters on July 28 that the BSP was on track to cut rates two more times in 2025. The key rate now stands at 5.25 per cent, a two-and-a-half-year low. After this month’s meeting, the BSP will have two more policy meetings before year-end.