The Bangko Sentral ng Pilipinas (BSP) cut its policy rate again in August, following the latest gross domestic product (GDP) and inflation data. Meanwhile, the US Federal Reserve (Fed) seems poised to cut later this year.

• Philippine GDP grew by 5.5% in the second quarter of the year, faster than the 5.4% recorded in Q1. Meanwhile, headline inflation was recorded at 0.9% in July, the lowest in six years.
• The BSP reduced its target reverse repurchase (RRP) rate for the third consecutive time this year to 5.00%.
• On the global side, Fed Chair Jerome Powell hinted at possible rate cuts.

• Metrobank maintains its forecast that the full-year average GDP growth this year will settle at 5.5%, at the lower end of the government’s 5.5- 6.5% target for the year.
• We expect another 25-bps cut from the BSP and a cumulative 50 bps worth of cuts from the Fed toward the end of the year. These will bring the target RRP and the Federal Funds Rate (FFR) target range down to 4.75% and 3.75%-4.00% by end-2025, respectively.
   

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