BSP cuts interest rate 25 basis points
The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) [link] decided to cut interest rates by 25 basis points to 6.25% (from 6.50%). This is the first rate cut since 2020, and the first time the interest rate has changed in any way (up or down) since October of last year. The BSP’s statement on the cut said that its inflation outlook is “supported by well-anchored inflation expectations over the policy horizon”, and that the “balance of risks to the inflation outlook continues to lean toward the downside for 2024 and 2025.” The downside risk to inflation (that inflation will be lower than projected) is “linked mainly to lower import tariffs on rice”. The BSP concluded as follows: “With inflation on a target-consistent path, the current macroeconomic outlook supports a calibrated shift to a less restrictive monetary policy stance. Nonetheless, monetary authorities remain mindful of lingering upside risks to prices.”
