Bangko Sentral seen to resume rate cuts to aid economic growth

ABS-CBN News

Posted at Aug 07 2019 02:31 PM | Updated as of Aug 07 2019 02:41 PM

Bangko Sentral seen to resume rate cuts to aid economic growth 1
Bangko Sentral ng Pilipinas’ (BSP) new governer, Benjamin Diokno at work shortly after an interview with Cathy Yang for ANC’s The Boss, held at the BSP headquarters in Manila on March 12, 2019. George Calvelo, ABS-CBN News

MANILA -- The Bangko Sentral ng Pilipinas is poised to resume cutting interest rates on Thursday, with economic growth unlikely to rebound sharply and as inflation cools further, a Reuters poll showed.

Economists polled by Reuters unanimously predicted that the BSP's Monetary Board would cut the overnight borrowing rate by 25-basis points on Thursday, hours after second quarter gross domestic product growth numbers are announced.

The median forecast of economists was for a 5.9-percent growth in GDP, from 5.6 percent in the previous quarter, marking the second straight quarter of growth below 6 percent.

Inflation cooled further to 2.4 percent in July, from 2.7 percent in the previous month, staying within the BSP's 2 to 4 percent target for the sixth straight month.

The BSP hiked interest rates by a total of 175 basis points last year to rein in inflation, which peaked at a near-decade high of 6.7 percent in September and October.

However, with inflation no longer a worry, the central bank began to unwind its tighter policy with a quarter-point rate cut in May, the first since October 2012, to shore up the economy against risks including simmering US-China trade tensions.

Some economists expect more policy rate easing before the year ends and further cuts in banks’ reserve requirement ratio (RRR) after a 200 bps phased reduction in RRR through July, to spur greater economic activity. -- with reports from Reuters