BSP to cut rates by 25 bps to 6.00 on Oct 16 economists say

BENGALURU, Oct 14 Reuters The Philippine central bank will cut its key policy rate by 25 basis points both in October and December to support economic growth as inflation is expected to stay under control, according to a majority of economists in a Reuters poll.

Expectations of inflation returning to the Bangko Sentral ng Pilipinas39; BSP 24 target helped the central bank kickoff its easing cycle in August. Ever since, inflation has dropped to 1.9, supporting the prospect of further rate reduction.

Governor Eli Remolona recently said that a 25basispoint reduction would be a norm if the economy was not poised for a hard landing.

All 23 economists in the Oct. 814 Reuters poll expect the BSP to cut its overnight borrowing rate by 25 basis points bps to 6.00 on Oct. 16.

That would be followed by another quarterpoint cut to 5.75 in December, according to median forecasts, with a strong majority, 16 of 21 economists seeing the policy rate at 5.75, four expecting it at 6.00 and one at 5.50.

The decline in headline inflation reinforces our view that the BSP will continue to cut rates this year after kicking off its easing cycle early. We reiterate our forecast for BSP to cut by 25 bps at each of the last two meetings of the year, said Euben Paracuelles, chief ASEAN economist at Nomura.

The Fed39;s rate cuts also support further easing by the BSP, but we still think it is unlikely to be more aggressive with 50…