Philippines fiscal policy update:
The finance minister of the Philippines, Ralph Recto, who is a member of the seven-member policy-making monetary board, stated on Monday (May 27) that the country’s key policy rate, currently at a 17-year high of 6.5 percent, philippines-expects-150-bps-rate-cuts-in-2-years-finance-minister could potentially see a significant reduction of up to 150 basis points over the next two years. This anticipated rate cut is supported by an improving outlook for inflation.
Recto mentioned the possibility of the central bank initiating rate cuts within this year, with the likelihood of furPhilippinesther rate reductions in 2025.”Surely, I don’t expect interest rates to rise any further. In fact, if there is enough time, they will start to decrease, possibly by 150 basis points over the next two years,” Recto stated at an economic forum.
Annual inflation has accelerated for the third consecutive month in April, reaching 3.8 percent and bringing the average rate for the first four months of the year to 3.4 percent, which is still within the central bank’s 2 to 4 percent target range.
While the central bank anticipates “higher inflation” from May to July, the rate of consumer price increases should “return to the target range” after that, senior assistant governor Iluminada Sicat mentioned at the same forum.
Sicat added that the central bank will be “cautious not to lower interest rates too early” in order to address the upside risks to inflation.
