Philippine central bank to cut key rate on June 19 to support economic growth: Reuters poll
BENGALURU, June 17 (Reuters) - The Philippine central bank is expected to cut its key interest rate again on Thursday as slowing inflation allows it room to support the domestic economy amid weaker growth, a Reuters poll of economists found.
That marks a shift from the April survey when the majority of economists had expected the Bangko Sentral ng Pilipinas (BSP) to keep rates on hold in its June meeting.
Inflation slowed to 1.3% in May, the weakest pace in over five years and below the BSP's 2%-4% target range, while first-quarter growth missed expectations despite a surge in public spending.
In a June 10-17 Reuters poll, 22 out of 25 economists forecast that the BSP would lower its overnight borrowing rate (PHCBIR=ECI), opens new tab by 25 basis points (bps) to 5.25% on June 19. The rest expected rates to remain unchanged at 5.50%.
"Progress on the inflation front opens the door for the BSP to consider another rate cut," said Sarah Tan, an economist at Moody's Analytics.
"Further, the recent stabilisation of the peso will provide an additional nudge to the decision-making process. Continued monetary easing would play a vital role in supporting the domestic economy amid a complex external environment," Tan said.
Among those who provided longer-term views, 12 of 23 economists, or over 50%, projected the benchmark rate would fall by another 25 bps to 5.00% by the end of the third quarter. The rest forecast 5.25%.
The median view was a cut of 50 bps to 5.00% this year, though economists were divided on where rates would be by end-2025.
Governor Eli Remolona signalled in April that more rate cuts were likely. However, some polled economists said the BSP's policy path may be complicated by the U.S. Federal Reserve, which is widely expected to keep rates on hold until September.
"While downside risks to both growth and inflation suggest more cuts are needed...the Federal Reserve's path will likely play an equally important role in determining the magnitude of rate cuts by the BSP," noted Shreya Sodhani, regional economist at Barclays.
"With our U.S. economists now looking for only one cut by the Federal Reserve this year, we think the BSP can ease only twice more while keeping its desired 100 bps differential between its policy rate and the fed funds rate," Sodhani said.
(Other stories from the June Reuters global economic poll)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
4 hours ago
- The Independent
Inflation set to slow down following April's bill hikes
The Consumer Prices Index (CPI) Inflation rate in the UK is expected to drop to 3.3% in May, down from 3.5% in April, according to a consensus of analysts. April's CPI rate should have been 3.4% instead of 3.5% due to an error in vehicle tax data, according to the Office for National Statistics (ONS), but the official figure was not revised. Economists predict that price rises stabilised in May after household bills increased in April due to a rise in the energy price cap and other charges. Sanjay Raja from Deutsche Bank anticipates a decrease in transport service Inflation in May, particularly in airfares and package holiday prices, following Easter holiday increases in April. Rising oil prices, triggered by recent events such as Israel's attack on Iran's nuclear programme, could potentially increase Inflation in the UK by impacting energy costs.
BBC News
6 hours ago
- BBC News
World Business Report US-China trade tensions may benefit South East Asia
The countdown continues to trade deals with Washington. Ahead of President Trump's threatened tariff hikes next month, we're hearing from South East Asia, and looking at complaints that Chinese firms may be dumping goods, undermining regional economies. Also in the show, the disruption to aviation from the Iran-Israel conflict. And why Chinese officials are being ordered to drink less? You can contact us on WhatsApp or send us a voicenote: +44 330 678 3033.
Reuters
6 hours ago
- Reuters
Bank of Canada governing council is concerned inflation could persist for longer
By Promit Mukherjee OTTAWA, June 17 (Reuters) - Members of the Bank of Canada governing council were concerned that underlying inflationary pressures led by trade disruption and uncertainty could persist for a long time, minutes of the meeting showed on Tuesday. The central bank held its key benchmark rate at 2.75% on June 4, citing the need to monitor the impact of U.S. tariffs on Canada and on rest of the world and how businesses and consumers adapted to it. Its summary of deliberations showed the members took into consideration the unexpected firmness in inflation data to take its rates decision and that the team spent considerable amount of time probing how trade policy was influencing prices. "Underlying inflationary pressures could persist for an extended period as consumers and businesses adapt to the rewiring of global trade," the minutes said, even as the members acknowledged there could be downward pressure on prices too. Businesses have been reporting that they would pass on higher costs stemming from trade disruptions, the members noted, adding that surveys showed that even consumers see prices rising. Canada's annual inflation rate fell to 1.7% in April due to some tax removal, but closely tracked core measures of inflation rose above the bank's target range of 1% to 3% in the same month, stoking concerns that inflation was firming up. The governing council excluding impact of taxes, inflation was 2.3%, which was slightly above expectations. The fall in the rate of inflation to below 2% had helped the BoC to cut interest rates aggressively by 225 basis points since June last year, but the uncertainty and subsequent tariffs imposed by President Donald Trump has disrupted the bank's predictions. "Members agreed that cost increases from trade disruptions may be playing a role in inflation in goods prices, but the direct impact from retaliatory tariffs was not yet evident," the summary said. The rate-setting team acknowledged that the pass-through of higher input costs to consumer prices would be difficult to track going forward. The governing council will closely track how inflationary pressures are evolving and carefully assess the timing and strength of the downward pressure on inflation from a weaker economy and the upward pressure on inflation from higher costs, the members agreed. The deliberations said if the recent firmness in underlying inflation were to persist, it would be more difficult to cut the policy rate. However, if the economy weakens and cost pressures are contained, there could be a need to cut rates in the future. (Reporting by Promit Mukherjee, editing by Dale Smith) ((Reuters Ottawa bureau; opens new tab)) Keywords: CANADA CENBANK/
