The research division of the country’s second-largest private bank expects the Bangko Sentral ng Pilipinas (BSP) to begin easing its monetary policy by the fourth quarter of 2024, cutting its benchmark by 50 basis points this year.
Metrobank Research said the BSP “may begin its own easing cycle in the fourth quarter, lagging the Fed’s first policy rate cut to support the peso.”
“Given the new projections on US policy rate, we now forecast a total of 50 bps in cuts for the year to 6.0 percent, down from our previous projection of 75 bps,” it said.
It revised its forecast after the US Federal Reserve maintained the Federal Funds Target Rate (FFR) at 5.25 percent to 5.50 percent for the seventh consecutive time during its Federal Open Market Committee (FOMC) meeting on June 12, 2024.
US headline inflation fell flat on a month-on-month (MoM) basis in May, slower than the 0.1 percent consensus estimate and the 0.3 percent print recorded in the previous month. Year-on-year (YoY), US inflation accelerated to 3.3 percent.
The BSP’s Monetary Board on May 16 kept the overnight borrowing rate steady at 6.5 percent, hinting it would continue to do so “until inflation settles firmly within the target range of 2 percent to 4 percent.
It said risks to the inflation outlook continue to lean toward the upside due mainly to higher transport charges and toll rates, increased prices of food commodities amid prolonged global supply constraints, higher electricity rates and elevated global oil prices.
