Easing inflation provides room to further reduce policy rates –Recto

Finance Secretary Ralph Recto (File photo: Ralph Recto/Facebook)

By Anna Leah Gonzales, Philippine News Agency

MANILA – Finance Secretary Ralph Recto said easing inflation provides room for the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board to further reduce policy rates this year.

“I think the BSP is clear that we expect a 50-basis-point rate cut all the way ‘til the end of the year. I think they’ve messaged that too, right? We’ve messaged that as well early on,” Recto told reporters in a recent informal press chat.

The Monetary Board of the BSP has so far cut policy rates by a total of 125 basis points since last year.

Recto said he expects two more rate cuts this year as inflation remains manageable.

“As of today’s data, I think inflation is on its way down,” Recto said.

Headline inflation settled at 1.4 percent in June bringing the year-to-date rate to 1.8 percent, which is still below the lower end of the government’s 2 percent to 4 percent target range.

Recto said the Philippines can still cut rates despite market expectations that the US Federal Reserve will hold rates steady due to pick up in US inflation.

“But Trump wants to change the Fed, right? He wants a rate cut. That’s what happens there. But for us, as we’re looking at our own inflation data, so far that looks good,” he said.

“I think we have room to cut. Maybe not two, depends on what happens in the US as well. But as of today, I would assume that we’re okay for two rate cuts.”