STANDARD Chartered Bank expects the Bangko Sentral ng Pilipinas (BSP) to cut as much as 75 basis points in its policy rates until the end of the year.
Jonathan Koh, StanChart economist for Asia, said while the cut could start in the BSP’s August meeting, it is also likely it may be moved to the next meeting due to the surprising inflation figures in July.
“I’m still keeping to my view that the BSP will cut next week because if you look at the underlying details of the second quarter GDP growth, and if you look at how inflation is, it’s really suggesting that growth momentum is soft. So there isn’t a necessity for the BSP to keep monetary policy settings at this kind of level…I think the BSP could potentially take the chance to actually cut rates next week,” he said.
Koh also said the peso could rally against the dollar given the expected rate cut in the US, starting in September.
Koh said the economy is likely to grow 6 percent for the year given the underlying factors of the second quarter GDP figures released by the government Thursday.
“(The) second quarter GDP… of 6.3 percent does seem strong, but underlying details suggest growth momentum may actually be softer than what headline is actually suggesting,” he said.
