PSEi extends gains on bets BSP will follow Fed cut

Philippine stocks extended their winning streak on Thursday, with investors betting that the Bangko Sentral ng Pilipinas (BSP) might soon follow the US Federal Reserve’s move to ease monetary policy, boosting appetite for risk assets.

The benchmark Philippine Stock Exchange index (PSEi) climbed 0.37% or 22.96 points to close at 6,233.62, while the broader all-share index added 0.15% or 5.84 points to 3,734.45. It was the PSEi’s third straight day of gains.

“Market reacted positively to the Fed’s rate cut, as this move could prompt a similar action from the BSP,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in a Viber message. “A potential rate cut by the BSP may boost market sentiment, contributing to the recent upward movement in prices.”

He added that investors expect looser monetary policy to bolster economic activity and asset values.

The US Federal Reserve on Wednesday cut its benchmark rate by 25 basis points, its first reduction in almost a year, while signaling that two more cuts could follow before year-end.

Fed Chairman Jerome H. Powell pointed to weakness in the US labor market even as inflation showed signs of easing.

While Wall Street’s reaction was mixed — the Dow Jones Industrial Average closed higher, while the S&P 500 and Nasdaq slipped — Philippine investors viewed the Fed’s action as a cue for local easing.

Finance Secretary Ralph G. Recto earlier said the BSP could consider one or two 25-basis-point cuts in its policy meetings on Oct. 9 and Dec. 11, depending on US and domestic inflation trends.

Sectoral performance was mixed. Financials rose 1.04% to 2,123.69, holding firms gained 1.08% to 5,127.32 and services added 0.35% to 2,256.7. On the other hand, mining and oil sank 2.49% to 11,678.28, industrials slipped 0.62% to 8,987.12 and property shed 0.56% to 2,454.96.

Market breadth was almost flat, with 89 winners edging out 88 losers, while 66 stocks were unchanged. Net foreign selling totaled P55.05 million.

Value turnover thinned to PHP 6.87 billion from PHP 10.02 billion the previous day. A total of 2.09 billion shares changed hands, down sharply from Wednesday’s 7.48 billion. — Alexandria Grace C. Magno

Infrastructure spending unlikely to be affected by budget cuts, probe — DBM

Government infrastructure spending is unlikely to be significantly affected by the ongoing probe on anomalous flood control projects, the Department of Budget and Management (DBM) said.

“There could be some effect if irregularities are detected in specific projects, since it would not be prudent to continue while those projects remain under investigation,” Budget Secretary Amenah F. Pangandaman told BusinessWorld in a Viber message on Tuesday.

The Marcos administration has intensified its investigation on public works projects, particularly in flood mitigation projects that were nonexistent or uncompleted despite billions in funding.

Ms. Pangandaman said there should be minimal or no disruption in ongoing and compliant projects even with the creation of the Independent Commission on Infrastructure (ICI). The ICI was tasked to investigate anomalies in flood control and other infrastructure projects, with authority to recommend criminal, civil and administrative charges.

“In fact, the ICI mechanism is designed to reinforce transparency and accountability in the system, which ultimately supports more efficient and credible public expenditure,” she said.

Data from the DBM showed expenditure on infrastructure and other capital outlays rose by 6.5% year on year to PHP 148.8 billion in June, following the lifting of the election spending ban in early May.

This brought first-half infrastructure spending to PHP 620.2 billion. The full-year infrastructure program is set at PHP 1.51 trillion, or 5.3% of gross domestic product.

Department of Economy, Planning, and Development (DEPDev) Undersecretary Rosemarie G. Edillon said infrastructure rollout will proceed unless suspension orders are issued.

“Unless there’s an actual suspension, otherwise the utilization will drop. I’m not sure how they’ll manage that,” Ms. Edillon said on the sidelines of a House briefing.

Nigel Paul C. Villarete, senior adviser on public-private partnerships at Libra Konsult, Inc., said the ICI’s creation may momentarily slow down project execution, but will not dampen overall infrastructure spending.

“Improving transparency and resisting delays caused by mismanagement and/or corruption is beneficial to the overall infrastructure development of the country, both locally, and ODA (official development assistance)-funded,” Mr. Villarete said.

DEPDev earlier warned that the country’s ODA partners are closely watching how the government addresses corruption in flood control and other infrastructure projects.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said the ICI’s mandate may cause hesitancy in new infrastructure spending in the short and medium term.

“(This is) due to the fact that these will soon be under the microscope for any potential allegations of corruption. While the ICI’s task is very much welcome and long overdue, it could stifle economic activity in the interim,” Mr. Chanco said in an e-mailed statement.

Aside from the ICI, separate investigations are being conducted by lawmakers, the Bureau of Internal Revenue and Anti-Money Laundering Council. — Aubrey Rose A. Inosante, Reporter

Telcos urged to boost digital infra as Philippines opens to more players

Incumbent telecommunications companies are expected to ramp up their investments in digital infrastructure as competition is likely to heat up with the implementation of the Konektadong Pinoy law.

“Konektadong Pinoy Act will lower barriers for new entrants and encourage more players in the market. Incumbent telcos need to invest aggressively in infrastructure like 5G, fiber, and satellite. They need to focus on customers and improve services to be at par with Association of Southeast Asian Nations countries,” Samuel V. Jacoba, founding president of the National Association of Data Protection Officers of the Philippines (NADPOP), said in an interview on Wednesday.

The Konektadong Pinoy Act, or the Open Access in Data Transmission Act, lapsed into law last month. It streamlines the licensing process for new entrants, boosting competition in data transmission.

Ronald B. Gustilo, a national campaigner for the Digital Pinoys organization, said telcos must embrace consumer-centric innovation while also improving their network reach, particularly in underserved or geographically isolated and disadvantaged areas.

“Competition will no longer be won only on price but on quality of service. They must also prepare for stronger regulatory oversight on affordability and accessibility,” Mr. Gustilo said.

PLDT Inc. Chairman and Chief Executive Officer Manuel V. Pangilinan said the company is preparing for the entry of new players.

“It is a complicated subject. We have to be ready, I suppose,” Mr. Pangilinan said on the sidelines of an event last week.

Information and Communications Technology Secretary Henry Rhoel R. Aguda said the implementing rules and regulations (IRR) of the Konektadong Pinoy Act will be released by the first week of October.

“We are still doing the IRR consultation meetings. We are working to complete it before the end of the month,” Mr. Aguda said in a Viber message to BusinessWorld on Wednesday.

The Department of Information and Communications Technology has invited the country’s major telecommunications and internet providers for their inputs in the IRR, Mr. Aguda said previously. He has said that some foreign players like Elon Musk’s Starlink have also signified their interest in helping craft the IRR.

PLDT and Converge ICT Solutions, Inc. have previously indicated their readiness to take part in drafting the IRR of the Konektadong Pinoy Act, with Converge saying the company wants stronger regulatory authority in the IRR.

For its part, Globe Telecom, Inc. is preparing for new market players by ramping up its technology solutions and fiber offerings to stay competitive amid the growing demand for data and reliable internet connections.

For NADPOP’s Mr. Jacoba, incumbent players still have the leverage as they know how to navigate the market more than the new players.

“Incumbent telcos can introduce more customer-centric services and launch affordable plans to capture budget-conscious consumers. Over time, competition will likely push prices downward, but not drastically, unless new players bring disruptive business models or global economies of scale,” he said.

The threat to incumbent telcos will not be immediately felt despite the law explicitly opening the door for new internet service providers, Mr. Jacoba said.

“As new entrants challenge incumbents, telcos will likely introduce more diverse packages — from affordable data bundles to more flexible postpaid and prepaid options. While price reductions are possible, we think consumers should watch for value-added services,” Mr. Gustilo said.

Adel A. Tamano, chief revenue officer of DITO Telecommunity Corp., said security and data privacy should be the focus of the Konektadong Pinoy Act’s IRR.

The company said that the law should be lenient or open towards new entrants as the main goal of the Konektadong Pinoy law is to attract more players into the industry.

Earlier, the Philippine Chamber of Telecommunications Operators said some provisions of the law undermines regulatory oversight and threatens fair competition, as the law only requires entrants to secure cybersecurity certification after two years of operations.

For Digital Pinoys’ Mr. Gustilo, the lowering of barriers for players will reshape the market away from “near-duopoly” towards a multi-player competition.

“Incumbents should differentiate on quality by delivering faster, more reliable internet where it matters most such as urban centers and key growth corridors. In parallel, they should expand to underserved markets ahead of new players, leveraging their existing scale,” Mr. Jacoba added.

Hastings Holdings, Inc., a unit of the PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., holds a majority stake in BusinessWorld through the Philippine Star Group. — Ashley Erika O. Jose, Reporter

Peso rises before Fed decision

The peso continued to rise against the dollar on Wednesday as markets looked ahead to the US Federal Reserve’s policy decision overnight, with focus mainly on potential clues on further easing in the coming months.

The local unit closed at PHP 56.89 versus the greenback, inching up by two centavos from its PHP 56.91 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened Wednesday’s session sharply stronger at PHP 56.80 versus the dollar. Its intraday high was at PHP 56.75, while its worst showing was at PHP 56.945 against the greenback.

Dollars exchanged fell to USD 1.49 billion on Wednesday from USD 1.95 billion on Tuesday.

“The pair initially traded lower on growing bets of Fed rate cuts, but higher-than-expected US retail sales data pushed the dollar-peso to recover and finish the trading session at PHP 56.89,” a trader said in a phone interview.

The peso inched higher as the greenback touched a multi-month low early in the Asian session on expectations that the Fed would signal more cuts to support the world’s largest economy amid weak data recently, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Thursday, the trader sees the peso moving between PHP 56.60 and PHP 57 per dollar, while Mr. Ricafort expects it to range from PHP 56.80 to PHP 57.05.

Early in the Asian session, the dollar was on the defensive as global markets counted down to an anticipated rate cut by the Federal Reserve later in the day and waited on signals around the extent of future easing, Reuters reported.

The Fed was expected to cut its benchmark interest rate by a quarter of a percentage point to the 4.%-4.25% range at the end of its monetary policy meeting later in the global day.

The main focus beyond the rate decision will be on Fed Chair Jerome H. Powell’s comments on the outlook for US monetary policy.

“Markets are effectively daring the Fed to over-deliver on the dovish side,” said Dilin Wu, research strategist at Pepperstone. “The bigger question, though, is whether Powell can satisfy markets already leaning heavily on a dovish view, or whether conditions are ripe for a near-term shakeout in both USD and gold positioning.”

The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, edged up 0.1% to 96.723 after a 0.7% slide on Tuesday to the lowest since early July.

The euro was down 0.1% at USD 1.1855, after touching USD 1.1867 on Tuesday, its highest level since September 2021. The dollar was little changed at 146.43 yen following a 0.6% slide in the previous session.

“If the (Fed) chair is more dovish than expected, of course, you would expect that to weigh on the dollar, but really, how much more bearish can you get from here?” Mahjabeen Zaman, head of foreign exchange research at ANZ, said on a podcast. “We’ve already got more than five cuts priced in for the cycle.” — A.M.C. Sy with Reuters

PSE index jumps to 6,200 level on rate cut hopes

Philippine stocks rose on Wednesday, pushing the main index back to the 6,200 level, on hopes of more interest rate cuts here and in the United States.

The bellwether Philippine Stock Exchange index (PSEi) jumped by 1% or 61.92 points to close at 6,210.66, while the broader all shares index rose by 0.6% or 22.41 points to end at 3,728.61.

“The local market extended its rise as hopes of another BSP (Bangko Sentral ng Pilipinas) rate cut lifted sentiment,” Philstocks Financial Inc. Research Manager Japhet Louis O. Tantiangco said. “The decline in local yields and the strengthening of the peso also gave the market a boost.”

“The market was already positioning ahead of the US Federal Reserve’s decision, with sentiment also shaped by Finance Secretary Recto’s recent remarks suggesting the BSP may cut rates if the Fed does. With inflation still within the target range, a Fed cut could be a key trigger for the BSP to ease further later this year,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said.

Finance Secretary and Monetary Board member Ralph G. Recto said on Tuesday that the Philippine central bank may deliver one more rate cut before yearend, depending on the data and how markets react to the Fed’s policy statements overnight.

The BSP last month lowered borrowing costs by 25 basis points (bps) for a third straight meeting to bring the policy rate to 5%. It has now cut benchmark interest rates by a cumulative 150 bps since it began its easing cycle in August 2024.

Meanwhile, the Fed was widely expected to cut its benchmark interest rate by a quarter of a percentage point to the 4%-4.25% range at the end of its two-day monetary policy meeting overnight, Reuters reported.

The main focus beyond the rate decision will be on Fed Chair Jerome H. Powell’s comments on the outlook for US monetary policy.

Money markets expect the Fed to lower policy rates by nearly 70 bps by the end of 2026, according to LSEG data.

All sectoral indices closed in the green on Wednesday. Services went up by 1.9% or 42.01 points to 2,248.70; mining and oil climbed by 1.47% or 173.5 points to 11,977.50; financials rose by 1.02% or 21.30 points to 2,101.72; holding firms increased by 0.87% or 44.12 points to 5,072.14; property added 0.25% or 6.39 points to end at 2,468.97; and industrials moved up by 0.15% or 14.37 points to 9,043.38.

Advancers beat decliners, 104 to 83, while 59 names were unchanged.

“International Container Terminal Services, Inc. was the top index gainer, climbing 3.26% to PHP 507. DigiPlus Interactive Corp. was the main index laggard, falling 4.1% to PHP 22.20,” Mr. Tantiangco said.

Value turnover surged to PHP 10.02 billion on Wednesday with 7.48 billion shares traded from the PHP 6.56 billion with 3.69 billion stocks that changed hands on Tuesday.

Net foreign buying was at PHP 693.91 million, a turnaround from the PHP 35.46 million in net selling recorded the day prior. — Alexandria Grace C. Magno

Aug. transmission rates up as cost of power reserves rises

Power consumers will have to pay higher transmission charges in their electricity bills this month, due to increased cost of power reserves, the National Grid Corp. of the Philippines (NGCP) said.

“The reason for the increase is mainly due to the increase on the AS (ancillary services) rates, particularly from the reserve market,” Julius Ryan D. Datingaling, head of business and regulatory development at NGCP, said at a briefing on Wednesday.

The overall rate for August, which will appear in September electricity bills, climbed by 7.09% to PHP 1.4171 per kilowatt-hour (kWh) from PHP 1.3233 per kWh in July.

AS charges, or power reserves deployed by grid operators to support the transmission of power and to maintain reliable operations, rose by 13.4% to PHP 0.6659 per kWh from PHP 0.5872 per kWh a month earlier.

Mr. Datingaling said the increase in AS rates was due to spot quantity, or the amount of reserve capacity traded in the reserve market.

“That was due to market forces because it’s market-driven, so the rules on supply and demand will apply,” NGCP Spokesperson Cynthia P. Alabanza said.

Meanwhile, transmission wheeling rate — or what NGCP charges for its primary service of delivering electricity — inched up by 0.8% to PHP 0.597 per kWh from PHP 0.5923 per kWh.

Other charges included universal charge, feed-in tariff allowance, and value-added tax on transmission and AS charges.

“NGCP does earn from AS and does not benefit from changes in AS prices,” the company said.

Transmission charges reflect the cost of delivering electricity from power generators to the distribution system. These charges usually account for around 9% of a consumer’s electricity bill.

Meanwhile, the grid operator said it has implemented the necessary preparations and precautions to minimize the impact of Tropical Depression Mirasol on transmission operations and facilities.

“Preparations include ensuring the reliability of communications equipment, availability of hardware materials and supplies necessary for the repair of damage to facilities, as well as the positioning of line crews in strategic areas to facilitate immediate restoration work,” NGCP said.

Through its Integrated Disaster Action Plan, the company outlined procedures to ensure the readiness of all power transmission facilities expected to be affected by weather disturbance.

Ms. Alabanza said that the company upgraded its facilities to withstand 300 kilometers per hour (kph) of wind speed, from old facilities that were only able to withstand 180 kph winds.

Tropical Depression Mirasol is forecasted to move northwestward within the next 12 hours while traversing northern Luzon. It was set to exit the Philippine Area of Responsibility on Thursday morning or afternoon.

The NGCP officially started operations as a power transmission service provider in 2009. Under a congressionally granted 50-year franchise, the company has the right to operate and maintain the transmission system and related facilities. — Sheldeen Joy Talavera

Philippine car sales down 7.6% in August

Philippine vehicle sales declined year on year in August to the lowest volume in four months, dragged by weaker demand for both passenger and commercial cars, according to industry data.

A joint report by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) showed total vehicle sales fell by 7.6% from a year earlier to 36,174 units last month.

The drop was the slowest since the 10% decline in April, and the lowest volume since the 33,580 units sold that same month. On a monthly basis, vehicle sales slid 5.5% from 38,295 units in July.

“Despite a modest dip in month-on-month figures, the industry remains optimistic, driven by evolving consumer preferences and a growing shift toward sustainable mobility,” CAMPI said in a statement on Tuesday.

Passenger car sales, which made up over a fifth of industry volume, slumped 20% year on year to 7,591 units in August. Compared with July’s 8,120 units, passenger car sales were down 6.5%.

Commercial vehicle sales, which accounted for almost four-fifths of total sales, fell 3.5% to 28,583 units in August from a year earlier. This was also 5.3% lower month on month.

Within the commercial vehicle segment, light commercial vehicle sales dropped 4.4% year on year to 20,852 in August, while sales of Asian utility vehicles (AUV) inched up 0.2% to 6,840 units.

Month on month, light commercial vehicle sales were down 7.4%, while AUV sales rose 2.6%.

Sales of light- and medium-duty trucks and buses fell 11.6% and 10.6% year on year to 555 and 279 units, respectively, while sales of heavy-duty trucks and buses rose 26.7% to 57 units. Compared with July, sales of light, medium, and heavy trucks fell 8.6%, 7.6% and 27.8%, respectively.

From January to August, new car sales edged up by 0.2% to 305,381 units from a year ago. The growth was supported by commercial vehicles, whose sales rose 8.7% to 244,023 units. Passenger car sales, on the other hand, dropped 23.6% to 61,358 from a year earlier.

CAMPI said commercial vehicles remained the anchor of industry sales, while electrified vehicles (xEVs) gained traction, now accounting for 6% of the car market.

The industry sold 2,244 xEVs in August, or 6.2% of total sales, though this was down 17.1% from the 2,707 sold in July. From January to August, xEV sales reached 18,439 units, representing 6.04% market share.

Broader global and domestic risks are weighing on auto sales, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

“Protectionist policies, tensions in the Middle East and other geopolitical risks are headwinds that reduce sales, incomes, employment and other business opportunities,” he said in a Viber message. “That could reduce the ability to pay by borrowers, including those with auto loans.”

He also cited the Chinese “ghost month” belief, saying it might have discouraged some buyers in August.

Still, he expects better prospects in the coming months. “Better weather conditions would help improve vehicle sales data, especially towards the Christmas holiday season, amid lower interest rates that help increase demand for vehicles and auto loans,” he added.

The August figures show weaker demand across segments, John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, told BusinessWorld.

“Key drivers include higher interest rates, which make financing costlier, inflation edging up again, and consumer caution ahead of the ‘ber’ months,” he said in a Viber message.

He added that while the holiday season could spur some recovery through promotions and increased spending, the rebound might be modest given inflation, peso volatility and trade uncertainties tied to US tariffs.

Toyota Motor Philippines Corp. remained the dominant player with 146,357 units sold from January to August, up 4.1% from 140,654 units last year. It had a 47.93% market share.

Mitsubishi Motors Philippines Corp. ranked second with 57,908 units sold, down 1% from 58,513 units. Its market share was 18.96%.

Nissan Philippines, Inc. placed third with 15,160 units sold, down 17% year on year, accounting for 4.96% of the market.

Ford Motor Co. Philippines, Inc. sold 14,940 units, down 21.2%, while Suzuki Philippines, Inc. sold 14,519 units, up 9.9%. — Justine Irish D. Tabile, Reporter

Philippines may lose P30B from zero-tariff deal on US goods

The Philippines risks losing as much as PHP 30 billion in revenues if the government implements a zero-tariff scheme on selected American goods, the Bureau of Customs (BoC) told congressmen on Tuesday.

Customs Commissioner Ariel F. Nepomuceno said the agency projects PHP 27 billion to PHP 30 billion in collections from US imports such as vehicles, pharmaceuticals and soybeans this year. That revenue, however, would be foregone should tariffs be scrapped as part of trade talks with Washington.

“The reduction of tariff from our US imports… will impact our collections,” he told a House of Representatives hearing.

The discussions come as the US seeks wider trade concessions from Manila. US President Donald J. Trump earlier announced a 19% tariff on Philippine exports to the US, slightly lower than the 20% floated in August. In turn, the Philippines agreed in principle to exempt US cars, wheat, soybeans and medicines from domestic tariffs.

The Philippines had initially faced a 17% tariff in April.

Trade Undersecretary Allan B. Gepty said last month zero tariffs on American goods had not been formally granted, stressing that negotiations were continuing. Finance Secretary Ralph G. Recto also said in July that foregone revenues could reach about PHP 6 billion should the country agree to a narrower set of exemptions.

However, Mr. Nepomuceno’s estimate suggests a much bigger revenue impact if a broader tariff cut is applied.

The zero-tariff policy could complicate the government’s fiscal consolidation plans, John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, told BusinessWorld.

“The potential revenue loss is substantial, especially given the National Government’s ongoing efforts to manage the fiscal deficit and rising debt levels,” he said in a Viber message.

The Philippines’ debt-to-gross domestic product ratio stood at 63.1% as of end-June, the highest since 2005 and above the 60% threshold considered sustainable for developing economies.

Outstanding debt reached a record PHP 17.56 trillion in July, up 11.9% from a year earlier and already surpassing the government’s PHP 17.36-trillion projection for 2025.

Removing tariffs on selected US goods might ease consumer prices, but Mr. Rivera said the government should strengthen tax enforcement to offset revenue losses from the zero-tariff treatment.

“Beyond revenue concerns, the broader market implications could be mixed,” he said, noting that it could lead to cheaper goods but disproportionately affect producers.

“It may expose local producers, especially in agriculture and light manufacturing, to stiffer competition from cheaper US imports, which could affect domestic production and employment in vulnerable sectors,” he said.

Despite the risks, the Customs bureau expressed confidence in meeting its 2025 collection goals.

Customs Assistant Commissioner Vincent Philip C. Maronilla reported that revenues hit PHP 543.95 billion in the first seven months of the year.

“We’re pretty confident that we will reach, if not surpass, our 2025 collection target,” he told lawmakers.

The BoC is tasked with collecting PHP 1.06 trillion this year, 14.28% higher than its actual collection of PHP 931.05 billion last year.

Value-added tax (VAT) on imports has been the “largest and most consistent revenue contributor,” Mr. Maronilla said.

From January to July, VAT collections reached PHP 467 billion, close to the Bureau of Internal Revenue’s PHP 473-billion full-year target.
Economists said the government now faces a difficult balancing act between maintaining fiscal revenues and deepening trade relations with the US.

“While such a policy might bring short-term consumer gains, it must be approached with caution and complemented by safeguards,” Mr. Rivera said.

He added that any decision must weigh the potential benefits of cheaper imports and stronger trade ties against the long-term risks of eroding government revenue and weakening domestic producers. — Kenneth Christiane L. Basilio, Reporter

Federal Reserve move key to BSP rate cut — Finance chief

The Bangko Sentral ng Pilipinas (BSP) may deliver one more policy rate cut before year-end, but the move could depend on whether the US Federal Reserve lowers borrowing costs in its meeting this week, Finance Secretary Ralph G. Recto said on Tuesday.

Mr. Recto, who sits as a member of the BSP’s Monetary Board, told reporters the central bank is weighing the likelihood of the Fed’s first rate reduction this year and its implications for global capital flows.

“(This) depends on what happens in the US as well with the Fed,” he said. “[It] depends of course on our inflation numbers. But clearly, I think we can reduce the policy rate by another 25 basis points (bps).”

The Finance chief projected that the BSP might still implement two “safe” cuts of 25 bps each at its policy meetings on Oct. 9 and Dec. 11.

The BSP resumed monetary easing after inflation cooled within its 2-4% target, though a recent uptick in August could complicate its policy path.

Inflation averaged 1.7% in the first eight months, matching the BSP’s full-year forecast. The Philippine Statistics Authority will release September inflation data on Oct. 7.

Last month, the Monetary Board cut the benchmark rate by 25 bps to 5%, the lowest since November 2022. Since it started its easing cycle in August 2024, the BSP has slashed policy rates by 150 bps, including two separate 25-bp cuts each in April and June.

BSP Governor Eli M. Remolona, Jr. earlier noted that while the central bank had reached a “sweet spot” in its easing cycle, there is still space for another cut. However, he cautioned that shifts in inflation and external factors could alter the trajectory.

Mr. Recto said the Philippine economy remains on track to achieve its 2025 growth target of 5.5% to 6.5%. He also said the central bank is not yet in the final stretch of its easing cycle.

He added that the Philippines’ possible inclusion in JPMorgan’s Government Bond Index for Emerging Markets could boost investor confidence and help lower borrowing costs.

“What is important is that we may be included in the JP Morgan index,” he said.
“That will reduce rates as well. We’re very excited about that, and we have a good chance of getting 3% [or] 4% now. We’ll be in that basket, [and it will be] good for our credit rating.”

The Department of Finance earlier said the Philippines has been placed on JPMorgan’s positive watchlist, a precursor to inclusion in the index. Such membership could channel billions of dollars of passive investment into peso-denominated government bonds.

In a separate commentary, Nomura Global Markets Research said the BSP still has space to ease policy further while balancing the government’s fiscal consolidation drive with growth support.

“The government remains committed to its fiscal consolidation agenda but is slowing the pace in order to support growth, while BSP still has some scope to ease further,” Nomura economist Euben Paracuelles said.

Meanwhile, Mr. Recto said the Philippines is unlikely to return to the Financial Action Task Force’s (FATF) “gray list” of jurisdictions under increased monitoring for money laundering amid the government’s anti-corruption drive.

“We are already catching them,” he said. “They are being sued. People will be jailed. We will get our money back,” he added, referring to investigations into money laundering involving former Public Works engineers. The officials allegedly funneled flood-control funds through casinos.

The FATF removed the Philippines from its gray list in February after improvements in anti-money laundering and counterterrorism financing frameworks.

Last week, Senator Panfilo M. Lacson revealed that some Public Works officials allegedly laundered billions of pesos siphoned from flood-control projects by gambling in casinos and converting funds into chips. — Aubrey Rose A. Inosante, Reporter

Peso back at PHP 56 level with Fed cuts eyed

The peso returned to the PHP 56 level on Tuesday amid a weaker dollar as markets expect several rate cuts from the US Federal Reserve to support growth in the world’s largest economy.

The local unit closed at PHP 56.91 versus the greenback, jumping by 27.1 centavos from its PHP 57.181 finish on Monday, Bankers Association of the Philippines data showed.

The peso opened Tuesday’s session slightly stronger at PHP 57.07 versus the dollar. Its intraday high was at PHP 56.90, while its worst showing was at PHP 57.165 against the greenback.

Dollars exchanged rose to USD 1.95 billion on Tuesday from USD 1.52 billion on Monday.

“The dollar-peso closed lower as the market continued to price in the series of rate cuts from the Fed,” a trader said in a phone interview.

The greenback slid ahead of a widely expected cut by the Fed this week and potentially further easing for the rest of the year following recent data showing signs of weakness in the world’s largest economy, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Wednesday, the trader sees the peso moving between PHP 56.60 and PHP 57 per dollar, while Mr. Ricafort expects it to range from PHP 56.80 to PHP 57.05.

The dollar slid to a more than two-month low against sterling and the euro and a 10-month trough versus the Australian dollar on Tuesday as investors firmed bets for a Federal Reserve interest rate cut this week, Reuters reported.

The US dollar index, which tracks the currency against a basket of six major rivals, fell to 97.121 after hitting its lowest since July 7, with US President Donald J. Trump renewing calls for aggressive monetary easing.

Markets expect a 25-basis-point (bp) rate cut on Wednesday, with rapidly softening labor market data being the key driver of the ramp-up in easing bets in recent weeks.

Mr. Trump in a social media post on Monday called on Fed Chair Jerome H. Powell to enact a “bigger” cut, pointing to the housing market.

“Focus remains on the Fed meeting on Wednesday,” said Mohit Kumar, strategist at Jefferies. “Key would be Powell’s tone.”

“If Powell puts more emphasis on inflation risks or the uncertainty surrounding the growth and inflation outlook, we could see the market paring back some of the rate cut expectations,” he added.

Elsewhere, sterling rose 0.2% to USD 1.3627, hitting its highest since July 8.

Data showed on Tuesday that Britain’s jobs market has lost a little more steam, potentially easing worries at the Bank of England about persistent inflation pressures.

The euro rose as much as 0.3% against the weakening dollar to USD 1.1797, a level not seen since July 3.

The Australian dollar edged 0.06% lower to USD 0.6666 after climbing to USD 0.6677, its strongest level since Nov. 8.

Against the yen, the dollar slipped 0.3% to 146.920 ahead of the Bank of Japan policy meeting on Friday, with money markets expecting the central bank to keep rates at 0.5%.

Japan’s farm minister and the chief government spokesperson joined the race on Tuesday to lead the ruling party and replace outgoing Prime Minister Shigeru Ishiba, who announced his resignation last month. — A.M.C. Sy with Reuters

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