go through Katherine K. Chen
Bangkok remote NG piliPinas (BSP) now has more The U.S. Federal Reserve continues to take policy measures to support economic growth after it provides long-awaited cuts on Wednesday, but may remain cautious as inflation risks linger.
“The Fed’s decision is just another factor in the policy calculus of BSP… Last night’s decision and subsequent potential relief will provide BSP with more room to lower interest rates further if growth is still needed,” said Nicholas Antonio, chief economist at Metropolitan Bank & Trust Co. (Metrobank) T. Mapa said in a Viber message.
BSP Deputy Governor Zeno R. Abenoja said in a Philippine Economic Brief held in Cebu on Thursday that the central bank will continue to monitor inflation and growth.
“This year, we think inflation will average below the target. The target is 2% up to 4%. We may be averaged at around 1.7%… But for the next two years, 2026, 2027, inflation will be back in the middle of the target, around 3.3% to 3.4%, and because of that, we may be near the appropriate interest rates for policy. So, we are moving towards that, what we call the ‘sweet spot’ where interest rates are at the right level to promote growth but at the same time control inflation,” he said.
“What are we looking at? We are thinking about future inflation or potential inflation pressures. We are thinking about the growth volume. If the growth volume continues to be resilient, we don’t have to make a lot of adjustments, but we will continue to do baby measures. We are focusing on the expectations of inflation… So, over the course of the year, we still have two policy meetings.
Last month, the BSP’s third consecutive meeting reduced borrowing costs by 25 basis points (BP) to raise policy rates to 5%. It has now lowered its benchmark interest rate by 150 basis points since its downturn cycle began in August 2024.
BSP Governor Eli M. Remolona (Jr.
He also said that even if they expect prices to be managed, they see that “the risk of inflation outlook is greater than the outlook for output.”
The last two meetings of the Monetary Commission this year are scheduled to be held on October 9 and December 11.
Meanwhile, at Wednesday’s meeting, the Fed lowered its policy interest rate by 25 basis points to 4%-4.25%, the first cut since December and said it has gradually eased the focus of the labor market. Since September 2024, its cumulative cuts to 125 basis points.
Meanwhile, Fed Chairman Jerome H. Powell (Jerome H. Employment is unfavorable.
Although recent data show unemployment climbed to 4.3% in August and wage growth is much lower than expected, these comments hope to turn into a craving shift, although people hope for a very distant shift. Until March, a steep decline in benchmark employment figures also recently added to the view that the labor market was losing steam, strengthening the case to cut the multi-tax rate.
The U.S. central bank released its quarterly economic forecast on Wednesday, including exchange rate forecasts released in a chart called the “DOT chart”, which reflects greater expectations for this year’s expectations compared to the “points” of the June meeting, seeing 50 BPS by the end of the year.
Meanwhile, the Fed’s forecast still puts inflation at 3% at the end of the year, well above the central bank’s 2% target, while its economic growth forecast is Slightly higher in 1.6% and 1.4%.
Peso support
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said BSP could match future cuts from the Federal Reserve to maintain a “healthy” rate difference, but only if the data shows weak economy and weak inflation. The latest moves of the US Central Bank Differences between goals The rate and BSP are 75 bps.
Mr Remolona said the potential impact of interest rate differences on PESO is no longer concerned about their range, just as local units perform well with respect to the dollar, even if that profit margin has been below 100 BP for some time.
Metrobank’s Mr Mapa said the expansion between the key rates of BSP and the Fed could attract foreign inflows, which would allow PESO to be supported by the dollar, and Helps limit import inflation.
“The Fed’s easing easing provides BSP with more room for cutting without risk of sharp depreciation… If it is cut again as the Fed continues to relax, the difference may remain within a safe range, especially if both can be moved at any time. However, if the BSP moves faster than the Fed, the PESO depreciation may rise. That’s why BSPs carefully place it on the speed and dependency of data when it depends on the data, so that data dependence makes your data dependence, and thus your data dependence, and thus your data dependence on successful actions. Economists at United Bank of the Philippines said in Viber information.
He said that if the BSP is “too aggressively relaxed”, the peso could weaken, which could lead to higher import costs and higher Stoke prices.
“Secondly, although inflation is currently below target, there are risks in the supply shocks associated with the typhoon, higher rice tariffs and energy prices. If these substances are achieved, BSP must avoid excessive removal.”
“Finally, uncertainty and geopolitical tensions in U.S. trade policy could affect global capital flows. A sudden reversal of Fed policy or a surge in U.S. inflation could force BSPs to do so. Pause or even reverse relief. ”
Alvin Joseph AA, economist at the National Bank of the Philippines
When calibrating its monetary policy, BSP is more focused on domestic economic indicators, especially inflation and growth in GDP (Gross Domestic Product). ”
On Thursday, the peso was p57.06 p57.06 per dollar, weakening 17 Centavos from Wednesday’s P56.89.
So far, local units have risen by 78.5 from their P57.845 closed on December 27, 2024 from Centavos.
“At this point, the BSP does not appear to move at the speed or depth of the speed of the cut, so the difference in policy differences between the United States and the Philippines will further enhance PESO. It is also worth noting that the BSP’s differences are large and can reduce the economy’s larger scope to promote the stability of Peso to promote the stability of Peso, and pay the Chinese Bank Corper Corper Corper cormol corn of colo colo coloan v.
He said the prospect of more BSPs and the Fed’s price cuts would be positive for domestic bond yields and stock markets, adding that the stocks could bring the Philippine Stock Exchange Index (PSEI) to the 6,500-6,600-square-month period in the coming months.
On Thursday, PSEI rose 22.96 points or 0.37% to close at 6,233.62.
“We expect yields to fall and any upward corrections are limited because investors prefer to lock in yields at this point,” one bond trader added.
Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in a message from Viber that the U.S. central bank’s decision had no immediate impact on the Philippines market because investors had cut cuts.
“Moving forward, more economic data, such as CPI (Consumer Price Index) and employment data, could affect the timing of the Fed and BSP cuts,” he said. There are from Aaron Michael C.
