{"id":19571,"date":"2024-07-03T03:19:52","date_gmt":"2024-07-03T03:19:52","guid":{"rendered":"https:\/\/energybuzz.ph\/staging\/6915\/bsp-seen-to-have-slower-easing-cycle\/"},"modified":"2024-07-03T03:19:52","modified_gmt":"2024-07-03T03:19:52","slug":"bsp-seen-to-have-slower-easing-cycle","status":"publish","type":"post","link":"https:\/\/energybuzz.ph\/staging\/6915\/bsp-seen-to-have-slower-easing-cycle\/","title":{"rendered":"BSP seen to have \u2018slower\u2019 easing cycle"},"content":{"rendered":"
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THE BANGKO SENTRAL ng <\/span>Pili<\/span>pinas (BSP) may delay its easing cycle amid continued risks to the inflation outlook, the peso\u2019s <\/span>depreciation and a hawkish US Federal Reserve, analysts said.<\/p>\n

\u201cWe expect BSP to start its cutting cycle only after the Fed (i.e., in October), which is when we also expect inflation to be more entrenched within BSP\u2019s 2-4% target,\u201d Nomura Global Markets Research said in a report. <\/span><\/p>\n

According to Nomura data, the Philippines was among the top countries facing \u201cunderlying inflationary pressures\u201d in Asia, second only to Singapore.<\/p>\n

Nomura sees the BSP cutting rates by 50 basis points (bps) this year and another 100 bps in 2025.<\/p>\n

The Monetary Board only has three policy review meetings left for the year \u2014 Aug. 15, Oct. 17 and Dec. 19. <\/span><\/p>\n

Citi economist for the Philippines Nalin Chutchotitham said there is a chance the BSP will have a \u201cslower\u201d easing cycle.<\/p>\n

\u201cIn any case, we note the risk of slower rate cuts, which most likely depend on the speed of inf<\/span>lation decline, the timing of the Fed\u2019s rate cuts and potential depreciation pressure on the peso,\u201d she said in a commentary.<\/p>\n

Fed o<\/span>ff<\/span>icials earlier signaled the possibility of rate cuts being pushed back to as late as December. <\/span><\/p>\n

The peso has been trading at the P58-per-dollar range since May, when it sank to the level for the first time since November 2022.<\/p>\n

However, Citi still forecasts that the BSP will begin cutting rates by August for a total of 75 bps this year. <\/span><\/p>\n

\u201cWe continue to maintain our call for 25-bp rate cuts in August, October, and December 2024, followed by 25-bp rate cuts in February, May, and August 2025 as our base case,\u201d she said.<\/p>\n

Citi said that weaker-than-expected growth will also pave the way for reducing rates.<\/p>\n

\u201cNegative output gap projection supports monetary easing. While growth has been resilient so far, first-quarter 2024 gross domestic product (GDP) growth at 5.7% was below market\u2019s expectation,\u201d Ms. Chutchotitham said.<\/p>\n

The government is targeting 6-7% growth this year.<\/p>\n

Meanwhile, Diwa C. Guinigundo, <\/span>the country analyst for the Philippines of GlobalSource Partners and former BSP deputy governor, said he sees just one rate cut by the BSP this year.<\/p>\n

\u201cOne rate cut is therefore more likely, as the forward guidance has been quite confirmatory so far,\u201d he said in a brief, though did not specify the timing of the cut.<\/p>\n

\u201cA second reduction in November or December is, as usual, data-driven both in terms of actual and projected inf<\/span>lation rates in the next two years. The balance of risks would also be an important metric for the BSP,\u201d he added.<\/p>\n

Mr. Guinigundo also said June in<\/span>f<\/span>lation could breach the BSP\u2019s 2-4% target amid higher food prices and <\/span>the impact of the peso depreciation. <\/span><\/p>\n

\u201cHigher domestic production of basic commodities like grains and meat and timely importation in case of some shortfall would be key to sustained stabilization of price pressures and inf<\/span>lation. Non-monetary measures are important complementary policy intervention,\u201d he said.<\/p>\n

Inf<\/span>lation likely settled at 3.9% in June, based on the median estimate in a BusinessWorld <\/i>poll of 14 analysts conducted last week. This would mark the seventh straight month that inf<\/span>lation settled within the BSP\u2019s 2-4% target. June inf<\/span>lation is set to be released on Friday (July 5).<\/p>\n

\u201cAlthough difficult to pin down, a good computation of the country\u2019s output gap will also help in ensuring that an early or more easing would not dislodge inf<\/span>lation expectation and add inflationary pressure to an otherwise manageable inflation scenario,\u201d Mr. Guinigundo said.<\/p>\n

BSP Governor Eli M. Remolona, <\/span>Jr. has said that the central bank can begin policy easing as early as August.<\/p>\n

He signaled the BSP can cut rates by a total of 50 bps this year \u2014 a 25-bp cut in the third quarter and another in the fourth quarter. \u2014 Luisa Maria Jacinta C. Jocson<\/b><\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

THE BANGKO SENTRAL ng Pilipinas (BSP) may delay its easing cycle amid continued risks to the inflation outlook, the peso\u2019s depreciation and a hawkish US Federal Reserve, analysts said. \u201cWe expect BSP to start its cutting cycle only after the Fed (i.e., in October), which is when we also expect inflation to be more entrenched [\u2026]<\/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":[5796,14644,17696,9926,2868,4778,16282],"class_list":["post-19571","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-bsp","tag-bworldonline","tag-cycle","tag-easing","tag-have","tag-seen","tag-slower"],"yoast_head":"\nBSP seen to have \u2018slower\u2019 easing cycle - 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\/bsp-seen-to-have-slower-easing-cycle\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BSP seen to have \u2018slower\u2019 easing cycle - 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