Economy 2 MIN READ

After policy rate pause, a potential cut by year-end

The central bank has put the brakes on policy rate hikes. If the downward trajectory of inflation holds, a cut is not far behind.

May 18, 2023By Metrobank

The Bangko ng Sentral ng Pilipinas (BSP) kept the policy rate unchanged at 6.25%, after around a year of rate increases. This was attributed to easing inflation, as the inflation print slowed to 6.6% in April from 7.6% in March.

The BSP likewise revised its full-year average inflation forecast downward for both 2023 and 2024, as it estimates inflation to slow further and reach the target band of 2-4% by yearend.

We project the RRP rate to stay at the 6.25% level for the rest of the year, with a potential cut by year-end to 6.0% due to the projected downward trajectory of inflation.

Please see our report here for more information on meeting updates and our outlook.

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