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MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) may again cut the policy rate at its next meeting in June, as tame inflation makes space for more easing to support growth amid tariff-induced global headwinds. In a commentary, Junjie Huang, Deutsche Bank’s economist for the Philippines, said he was keeping their forecast of a quarter-point rate reduction at the June 19 meeting of the Monetary Board (MB), for now. Huang picked up the recent signal from BSP Governor Eli Remolona Jr.
, who had said that market expectations of another 75 to 100-basis point (bp) cut by the US Federal Reserve this year were “somewhat more dovish” than the MB’s view. READ: Two more rate cuts likely this year “We think this could translate to another 25 to 50bps in cuts this year, which in the MB’s view would complete this easing cycle,” he said. “For now, we maintain our view for BSP’s next 25 bps rate cut in June, but it remains ‘live’ given the rapidly evolving external environment,” he added.
The central bank last week resumed its easing cycle with a quarter point cut to the policy rate. The decision –– which was made in the wake of US President Donald Trump’s flip-flopping on his “Liberation Day” tariffs –– brought the overnight rate to 5.5 percent, with Remolona hinting at “further cuts” and the end of the easing cycle this year.
While the whole world was worried about the impact of heightened trade protectionism on economic growth, Remolona said the Philippines was experiencing something that many countries do not: tame inflation. The benign price growth, in turn, afforded the central bank enough room to cut rates again, he added. Latest data showed inflation had softened to a near five-year low of 1.
8 percent in March, better than consensus following slower hikes in food and transport costs. READ: PH inflation slowed to 1.8% in March, a near 5-yr low And price growth would likely stay within the 2 to 4 percent official target range this year.
The central bank even lowered its worst-case inflation forecast for 2025 to 2.3 percent, from 3.5 percent previously.
Separately, analysts at BMI, a unit of the Fitch Group, also believed that the BSP will continue easing in June, adding that they were holding off from revising their projection until there is more clarity on how the protectionist policies in the US will evolve. But if trade negotiations between Manila and Washington fall through, and a 17-percent tariff on the Philippine is enacted, BMI said it would revise its local policy rate forecast to pencil in more cuts. “Growth concerns have risen to the fore.
Trump’s tariffs have compounded the challenges faced by the Philippine economy, having already underperformed in Q4,” BMI said. Subscribe to our daily newsletter By providing an email address. I agree to the Terms of Use and acknowledge that I have read the Privacy Policy .
“Prompt policy support will be crucial for achieving the government’s 6 percent lower bound growth target,” it added..
