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PHILIPPINES: BSP Unexpectedly on Hold. 

PHILIPPINES
EM BulletPhilippinesBulletAPACEmerging Market News
  • The Bangko Sentral ng Pilipinas (“BSP”) remained on hold in what was viewed as a surprise by markets.
  • Citing increasing global uncertainties, Governor Remolona re-iterated that the BSP remains in an easing cycle and guided that 50bps of cuts can be expected this year.
  • The Governor pointed to firming domestic growth prospects but “uncertainty arising from global economic policies” as the driver for the decision; resulting in the BSP recalibrating their models.
  • The governor indicated that the BSP intends to dramatically reduce the reserve requirement ratio in the early part of 2025 by 200bps, suggesting that it could occur sooner than expected.
  • Whilst we forecast a cut, we were advocating a move to a more neutral stance given the global uncertainties.
  • In recent days the US economy has shown higher than expected inflation whilst the Fed Chairman has indicated that they are in no rush to alter policy.
  • This provides Central Bankers around the ASEAN region the ability to be more patient in their approach, especially in the face of the uncertainty created by tariffs. 
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  • The Bangko Sentral ng Pilipinas (“BSP”) remained on hold in what was viewed as a surprise by markets.
  • Citing increasing global uncertainties, Governor Remolona re-iterated that the BSP remains in an easing cycle and guided that 50bps of cuts can be expected this year.
  • The Governor pointed to firming domestic growth prospects but “uncertainty arising from global economic policies” as the driver for the decision; resulting in the BSP recalibrating their models.
  • The governor indicated that the BSP intends to dramatically reduce the reserve requirement ratio in the early part of 2025 by 200bps, suggesting that it could occur sooner than expected.
  • Whilst we forecast a cut, we were advocating a move to a more neutral stance given the global uncertainties.
  • In recent days the US economy has shown higher than expected inflation whilst the Fed Chairman has indicated that they are in no rush to alter policy.
  • This provides Central Bankers around the ASEAN region the ability to be more patient in their approach, especially in the face of the uncertainty created by tariffs.