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Philippines:  BSP Cuts Rates

PHILIPPINES

  • Key rate cut to 6.250% (estimate 6.250%)
  • Overnight deposit rate cut to 5.75% (estimate 6.000%)
  • Market consensus had moved in recent days with a slight majority of economists predicting a cut in rates.
  • Despite firmer than expected GDP and CPI, the BSP cut rates and left the door open for a further cut this year.
  • The BSP has two more meetings in 2024 and the signal is for one further cut unless ‘something pretty bad’ was to happen.
  • Domestic demand has been showing signs of moderating, reacting to higher rates and was the factor that overrode the higher-than-expected inflation. “That’s the reason for the easing,” Governor Remolona said. “We’re somewhat more confident in the inflation numbers coming down than in the GDP numbers going up.”

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