By Domingo Juan
An economist of Rizal Commercial Banking Corp. (RCBC) forecasts a 25-basis-point cut in the Bangko Sentral ng Pilipinas’ (BSP) policy rate this month in line with the same projection for the US Federal Reserve funds rate in September.
RCBC chief economist Michael Ricafort said in a report the BSP’s policy-making Monetary Board (MB) might start adjusting its key rate on Aug. 15 because it would have no meeting in September when the Fed is widely expected to cut its own rate.
Ricafort said the Monetary Board might keep the key rates steady just like what the Fed did during its July meeting or could start cutting the rates on Aug. 15 “especially if a Fed rate cut in September 2024 becomes more imminent since there will not be a BSP rate-setting meeting in September 2024.”
He said the projected adjustment this month is possible “so that interest differential would eventually be maintained.”
Ricafort said that after the August BSP policy-setting meet, the next schedule is on Oct. 17, 2024.
He said a “pause or possible cut in local policy rates [is] possible if the peso exchange rate is relatively stable, global crude oil prices still among 2.5-year lows and if headline inflation remains within the BSP’s inflation target of 2 percent to 4 percent for the coming months.”
The Philippines peso closed at 57.28 against the US dollar Friday, stronger than the previous day’s 57.32 and the previous week’s 58.08.
Inflation in July picked up to 4.4 percent from 3.7 percent in June on faster upticks in the housing, water, electricity, gas and other fuels.
The BSP said the jump is within its forecast for July, “but could follow a general downtrend beginning in August.”
It said the latest inflation report along with the third-quarter domestic growth of 6.3 percent, which is higher than the upwardly revised 5.8 percent in the previous quarter, would be among the factors that the MB would consider in its policy meeting Thursday.
“Looking ahead, the BSP will ensure that monetary policy settings remain in line with its primary mandate of price stability conducive to sustainable economic growth,” it said.
