Bangkok remote NG piliPinas (BSP) said Thursday There are two more room for cutting speed this Year As inflation remains benign.
“There is a room [to cut] Because inflation is very low and growth has also decreased. BSP Governor Eli M. Remolona Jr. told reporters.
BSP lowered its target reverse buyback rate by 25 basis points (BPS) last month, from 5.5% to 5.25%, amid moderate inflation outlook and weaker first-quarter economic growth.
Inflation cooled to 1.3% in May more than five years. This brings the five-month average to 1.9%, slightly below the 2-4% target band of BSP.
one BusinessWorld The median June inflation rate, which was scheduled to be released on Friday (July 4), was 1.5%.
Asked if the slowdown in inflation gave BSP room to cut, Mr Remorona replied: “Absolute.”
Asked if this means cutting the two rates this year, he replied: “It’s possible. We still have meetings in August, October and December.”
Mr Remolona said in a mixed English and Filipino: “The slowdown in growth (in the first quarter) is due to uncertainty. Large consumer projects and investments were delayed and exports were slowed.”
The Monetary Commission’s remaining policy meetings this year are scheduled to be held on October 28, October 9 and December 11.
Mr Remolona said the central bank will remain data-dependent before deciding whether more interest rates are needed to support economic growth.
The Development Budget Coordination Committee (DBCC) has lowered its GDP growth target this year from 6-8% to 5.5-6.5% due to increased global uncertainty arising from U.S. trade policy shifts and conflicts in the Middle East.
DBCC also narrowed its GDP growth target from 2026 to 2028 from 6-8% to 6-7%.
Mr Remolona said the revised DBCC growth target is more “realistic”.
However, he said BSP will currently maintain its inflation target of 2-4%.
DBCC narrowed the inflation assumption for 2025 from the previous 2-4% to 2-3%, but retained the 2-4% outlook from 2026 to 2028.
Ruben Carlo O. Asuncion, chief economist at Union Bank of Philippines, said in a Viber message that he still expects to lower the tax rate this year.
“Nevertheless, if conditions are guaranteed, the door now can now open for a second. The revised DBCC target, the pre-wind of inflation and global and domestic headwinds (global and domestic headwinds (slower global growth, geopolitical tensions and domestic risks, oil prices and risks such as BSP oil prices and rice tariffs) are factors that can prove more adaptable and can prove that higher growth is possible.
Reyes Tacandong & Co. Senior consultant Jonathan L. Ravelas said in Viber information that as long as the inflation rate of BSP remains within the 2% low 2%, BSP can be lowered twice.
Salary Hiking
Meanwhile, Mr Remorona said that the daily wage increase in Metro Manila’s minimum wage could affect inflation.
“Maybe there might be a little bit, but we’ll still analyze it,” he said.
Starting July 18, about 1.2 million workers in the national capital region and nearby cities and provinces have increased their wages by P50 per day, the highest wage granted by the National Wages and Productivity Commission.
The Labor and Employment Department said that the salary per day is equivalent to a monthly increase of P1,100 for five days of working week, or P1,300 for those working six days a week. – Aaron Michael C.
