Nomura: Another interest rate cut possible if inflation further cools

ABS-CBN News

Posted at May 31 2019 12:48 PM | Updated as of May 31 2019 01:07 PM

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MANILA – The Bangko Sentral ng Pilipinas (BSP) may cut benchmark interest rates again in June if inflation eases further, an economist from Nomura Securities said Friday. 

The BSP slashed key interest rates by 25 basis points last May 9, bringing to 4.5 percent the overnight borrowing rate used by banks to price loans. It was raised by 175 basis points in 2018 to address inflation. 

“I think for BSP, they always have room to reduce policy rates further, a lot of that will depend, in terms of the time and the extent which they cut, on the inflation outlook,” Nomura Securities chief economist Euben Paracuelles told ANC.

“If it [inflation] goes down further, I think we could see another rate cut as early as the next meeting,” Paracuelles said. 

He said the country’s gross domestic product could grow “slightly above” 6 percent or below 6.5 percent in 2019 after budget delays dragged first quarter growth to 5.6 percent. 

The BSP's monetary board will meet for the next policy meeting on June 20.