Finance Secretary Ralph Recto has hinted at the possibility of the Bangko Sentral ng Pilipinas (BSP) lowering interest rates by August, citing easing inflation and potential moves by the U.S. Federal Reserve.
“It’s definitely a possibility,” Recto stated. “It boils down to inflation, of course, and what the Fed decides. The gap between US and Philippine rates shouldn’t be too big, or investors might pull their money out and seek safer options.”
Recto suggested that multiple rate cuts are possible, potentially totaling 1.5 percentage points within two years.
“So, it’s possible that you may have a rate cut this year, and possibly more rate cuts next year. I surely don’t expect interest rates to go any higher. If not, there’s a time that they will start going down, maybe by 150 basis points in the next two years,” he explained.
The Monetary Board recently kept rates steady at 6.5 percent for the fifth consecutive policy meeting, though inflation concerns persist.
Additionally, it maintained the interest rates on overnight deposit and lending facilities at 6.0 percent and 7.0 percent, respectively. The BSP continues to monitor transportation costs, food prices, electricity, and global oil as potential inflation threats. (bilyonaryo.com) ##
