BSP: Rate cut still on table in Aug.

The  Bangko Sentral ng Pilipinas (BSP) could continue lowering interest rates at its meeting in August, its top official said.

BSP Governor Eli M. Remolona, Jr. told reporters on Tuesday that a rate cut is still “on the table” at the Monetary Board’s next policy review on Aug. 28.

If realized, this would mark the third straight rate cut delivered by the Philippine central bank.

The BSP has so far reduced borrowing costs by a total of 125 basis points since it began its easing cycle in August last year.

Key data releases such as the second-quarter gross domestic product (GDP) will be available by the next policy meeting, Mr. Remolona noted.

He said he expects GDP to have expanded by “around 5.5%” in the second quarter, which would be slightly faster than the 5.4% GDP growth in the first quarter.

The Philippine Statistics Authority is set to release second-quarter GDP data on Aug. 7.

The government is targeting a 5.5-6.5% growth this year.

The BSP can also continue easing rates even after the US starts imposing a 19% tariff on goods from the Philippines starting Aug. 1.

Mr. Remolona said the impact of the tariffs on the Philippine economy will be “modest.”

“Globally it’s much clearer now than before. Our issue is more the global spillover effects than the direct effect,” he said.

“A lot of sectors are exempt. We’re not a big trading economy so that limits the impact on us.”

The Philippines’ new US tariff rate is now the same as Indonesia, and slightly lower than Vietnam’s 20%. 

Meanwhile, the BSP chief said he is keeping his outlook for two more rate cuts this year.

After August, the Monetary Board has two remaining meetings scheduled for October and December.

Asked if there was a possibility for a third rate cut, Mr. Remolona said it would take “something very unusual” to warrant this scenario.

A drastic slowdown in growth was also “very unlikely,” he added.

“Growth has to slow down dramatically… it will depend on not just the quarterly growth but the prospects.”

Meanwhile, Mr. Remolona said they are still comfortable with the peso at the P57 level.

“That’s still quite strong,” he said in mixed Filipino and English.

The peso closed at PHP 57.31 per dollar on Tuesday, depreciating by 11 centavos from its PHP 57.20 finish on Monday. This was its weakest close in more than a month or since its PHP 57.58 close on June 23.

“As you know, we don’t have a target for the peso. I’m more concerned about the potential inflationary effects.” — Luisa Maria Jacinta C. Jocson,  Senior Reporter