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HONG KONG, China — Asian markets pressed ahead with their rally Friday as another round of US data further stoked expectations that the Federal Reserve will cut interest rates more than it has indicated next year.
1. Bangko Sentral ng Pilipinas (BSP) [link] could start to cut rates as soon as Q1, according to Pantheon Macroeconomics, and cut rates by at least 100 basis points by the end of 2024.
The Bangko Sentral ng Pilipinas (BSP) joined its American peer, the US Federal Reserve (the “Fed”), in deciding to do nothing with interest rates yesterday. The Fed was the first to act, electing to pause for the third straight cycle, and guiding the market to expect at least three interest rate cuts in FY24. According to this CNBC article, the number of cuts is less than the market was pricing in, but more than the Fed had been previously talking about. The BSP then did the expected, which was to decide to do nothing. The BSP said that the government’s “non-monetary interventions will remain crucial” in FY24 to “sustain the disinflation process”, and that the “the Monetary Board continues to see the need to keep monetary policy settings sufficiently tight to allow inflation expectations to settle more firmly within the target range”.MB BOTTOM-LINE: I’ve seen a ton of blue checkmark accounts on X talking about how the Fed’s sudden willingness to flip from hawkish scold to dovish flirt is just part of their election cycle politics, and while this line of thinking has some basis in reason (rate cuts would benefit the economy, and a hot economy is good for electoral politics), it just doesn’t align with all the unpopular moves that the Fed has made over the past year. Maybe the Fed has seen something in the data that has allowed it to soften its stance and consider talking about 2024 cuts. The more interesting question is on our side, where the BSP performed the same action (smashed that pause button) but with background music that was a lot less peaceful and serene. The BSP’s focus is again on the government’s role, and while the Marcos administration has been better than the Duterte administration in terms of economic management, it doesn’t inspire confidence that our situation relies on the government’s performance.
THE plan to provide a one-time P5,000 financial assistance to “near poor” workers next year yesterday received strong backing from the labor sector and the Department of Labor and Employment (DOLE).
Senator Win Gatchalian urged local government units (LGUs) in the country to help lower down transportation and logistics that are ultimately affecting food inflation amid surging food demand related to Christmas and New Year festivities.
The socioeconomic planning department under the Marcos administration expressed elation on Saturday over the country’s good inflation and employment figures as shown in newly released government data.
MONETARY authorities have been able to keep inflation expectations anchored amid concerns that consumer price growth could spiral out of control, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said.