By Luisa Maria Jacinta C. Jocson, A reporter
CEBU – The central bank of the Philippines is easy the cycle continues although it may choose to keep prices stable at its December meeting, upfsaid cial.
“We are still in the process of naming them. Either we cut it in December, or reduce it in the next meeting, but gradually,” Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. he told reporters on the sidelines of the BSP-International Monetary Fund (IMF) Systemic Risk. Interview in Mactan, Cebu on Tuesday.
Asked whether the central bank could keep interest rates steady at its December meeting, Mr. Remolona said in mixed English and Filipino: “Yes, of course. It depends on the data. We are not sure about December.”
Mr. Remolona reiterated that the central bank will continue to reduce the rate by 25-basis-point (bp).
Earlier he said that the BSP may not cut rates every quarter or every meeting.
Since starting its easing cycle in August, the BSP has reduced borrowing costs by a total of 50 bps so far.
The Monetary Board introduced 25-bp cuts at its meetings in August and October, bringing the benchmark to 6%.
Mr. Remolona previously signaled the possibility of a 25-bp cut on Dec. 19, Board of Finance. finternal policy meeting this year.
Meanwhile, he said weak gross domestic product (GDP) growth in the third quarter may have been a “mistake” and that growth may rebound in the fourth quarter.
The Philippine economy grew a weaker-than-expected 5.2% in the third quarter, its slowest growth fresidential areas.
This brought GDP growth over the nine-month period to 5.8%. The economy needs to grow at least 6.5% in the fourth quarter to ensure it can reach the lower end of the government’s full-year target of 6-7%.
Instead, the central bank is keeping a close eye on the latest developmentsfcontact information, said Mr. Remolona.
“The next number we should expect is Novemberfphone number, we’ll see what that is. Our expectation is that it will still be within our target band.”
The subject is enteredfit rose to 2.3% in October, bringing the 10-month average to 3.3%. This was still within the BSP’s target range of 2-4%.
By 2025, the BSP official said the Monetary Board is likely to deliver rate cuts in the 100-bp range.
“That’s not exactly the case. It could be more, it could be less, but that’s in the ballpark,” he added.
PERFORMANCE OF THE PESO
Meanwhile, the BSP governor said he is not worried about the peso’s recent performance.
“It is less than P59. We are not too worried about the peso depreciating, we appreciate it. We worry about going through effect. Right now, it’s still good,” said Mr. Remolona.
The peso closed at P58.81 per dollar on Tuesday, down 13 cents from its close of P58.68 on Monday, data from the Bankers Association of the Philippines said.
Markets are closely watching whether the peso will sink to the P59-per-dollar level. The peso fell to a record low of P59 per dollar in October 2022.
However, he said the central bank intervened “in small amounts.” “Just a little so that it doesn’t go down (too low compared to the dollar),” he said.
“We leave it to the guys in the financial markets, but if it gets too low, we talk. If it is not too sharp, it is not inflation. Inflation if sharp and persistent.”
He said the recent weakness of the peso was expected after Donald J. Trump was elected president of the United States. The US dollar has been rising amid market expectations that Mr. Trump will use higher interest rates that could further fuel inflation and delay the Federal Reserve’s planned rate cut.
“We monitor the swings that happen every few months, not every day. It is generally expected that the night before, this kind of news will put pressure on the peso.”
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