{"id":19276,"date":"2024-06-14T03:02:07","date_gmt":"2024-06-14T03:02:07","guid":{"rendered":"https:\/\/energybuzz.ph\/staging\/6915\/rate-cut-probably-after-fed-recto\/"},"modified":"2024-06-14T03:02:07","modified_gmt":"2024-06-14T03:02:07","slug":"rate-cut-probably-after-fed-recto","status":"publish","type":"post","link":"https:\/\/energybuzz.ph\/staging\/6915\/rate-cut-probably-after-fed-recto\/","title":{"rendered":"Rate cut probably after Fed \u2014 Recto"},"content":{"rendered":"
\n

By Luisa Maria Jacinta C. <\/b>Jocson, <\/b><\/span>Reporter<\/i><\/p>\n

THE BANGKO SENTRAL ng <\/span>Pili<\/span>pinas (BSP) will probably cut its policy rate after the US Federal Reserve, which has signaled it may start easing as late as December.<\/p>\n

Finance Secretary Ralph G. Recto said in a text message that he does not think the BSP will cut rates ahead of the Fed.<\/p>\n

Asked if the BSP would begin its easing cycle once the US central bank cuts rates, Mr. Recto, a member of the Monetary Board, said this was \u201chighly probable.\u201d<\/p>\n

The Federal Reserve held interest rates steady on Wednesday and pushed out the start of rate cuts to perhaps as late as December, Reuters reported. Fed officials are now projecting only one rate cut for the year compared with previous expectations of three.<\/p>\n

HSBC economist for ASEAN (Association of Southeast Asian Nations) Aris D. Dacanay said that the BSP does not have much room to cut ahead of the Fed.<\/p>\n

\u201cWith no dovish signals by the Fed, we think the space for the BSP to cut as early as August without leading to much volatility in the peso is limited,\u201d he said in an e-mail.<\/p>\n

HSBC expects the BSP to begin reducing rates after the Fed in the fourth quarter. The Monetary Board only has two meetings in the fourth quarter \u2014 Oct. 17 and Dec. 19. <\/span><\/p>\n

The Monetary Board has kept its benchmark rate steady at a 17-year <\/span>high of 6.5% since October 2023.<\/span><\/p>\n

BSP Governor Eli M. Remolona, Jr. has previously said that the earliest the central bank can begin cut<\/span>ting rates is in August, with a <\/span>total of <\/span>25-50 basis points<\/span> this year.<\/span><\/p>\n

Mr. Dacanay said that inf<\/span>lation would need to decelerate and settle f<\/span>irmly within the 2-4% target for the central bank to consider easing.<\/p>\n

\u201cAlthough this isn\u2019t our baseline scenario, what would open the opportunity for the BSP to cut ahead (of the Fed) is if inflation <\/span>precipitously and immediately eases before the August meeting,\u201d he said.<\/span><\/p>\n

\u201cAnd this will be a function of when the tarif<\/span>f rate cut on rice will be implemented and how fast the policy transmission will be.\u201d<\/p>\n

The National Economic and Development Authority Board approved a reduction in rice import tarif<\/span>fs to 15% from 35%. This measure is widely expected to bring down rice prices and ef<\/span>fectively, inf<\/span>lation.<\/p>\n

Bank of the Philippine Islands (BPI) Lead Economist Emilio S. Neri, Jr. said that the Fed\u2019s policy <\/span>will \u201cd<\/span>e<\/span>f<\/span>initely\u201d in<\/span>f<\/span>luence<\/span> the BSP\u2019s next moves.<\/span><\/p>\n

However, he said that the BSP does not need to wait for the Fed. \u201cEven if the peso comes under heavier-than-usual pressure BSP can cut well ahead of the Fed.\u201d<\/p>\n

Mr. Remolona earlier said the BSP does not need to wait for the Fed to begin its own easing cycle.<\/p>\n

\u201cAs long as Philippine headline inflation prints continue to surprise on the downside, BSP can begin cutting already,\u201d Mr. Neri added, noting to expect only \u201cmodest\u201d cuts.<\/p>\n

Headline inflation quickened for a fourth straight month to 3.9% in May from 3.8% in April. However, this marked the sixth straight month that inflation settled within the BSP\u2019s 2-4% target band.<\/span><\/p>\n

The BSP expects inflation to breach the target until July due to base ef<\/span>fects.<\/p>\n

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the BSP would likely match the rate cuts delivered by the Fed later this year and 2025 to maintain healthy interest rate dif<\/span>ferentials.<\/p>\n

\u201cIf any Fed rate cut becomes imminent in September 2024, the BSP could start to cut rates by August 2024 since there are no BSP rate-setting meetings in September 2024,\u201d Mr. Ricafort added. <\/span><\/p>\n

The Monetary Board\u2019s next policy meeting is on June 27. \u2014 with <\/i>Reuters<\/b><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

THE BANGKO SENTRAL ng Pilipinas (BSP) will probably cut its policy rate after the US Federal Reserve, which has signaled it may start easing as late as December.<\/div>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[102,14644,2243,15340,18338,1744,14983,11],"class_list":["post-19276","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-after","tag-bworldonline","tag-cut","tag-fed","tag-probably","tag-rate","tag-recto","tag-years"],"yoast_head":"\nRate cut probably after Fed \u2014 Recto - Energy Buzz<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/energybuzz.ph\/rate-cut-probably-after-fed-recto\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Rate cut probably after Fed \u2014 Recto - 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