Phillipines: Another rate cut expected in May – Standard Chartered

Economist at Standard Chartered Bank Chidu Narayanan updates his forecast for the Philippine economy following the Bangko Sentral ng Pilipinas (BSP) rate cut to 3.75% at its February meeting. The USD/PHP pair is being exchanged at 50.5570 after falling with the rate cut news.

Key quotes

“We now see one more 25bps rate cut from BSP at its May meeting (our prior call was for no cuts). We expect BSP to hold at its March meeting to assess the impact of its 100bps of cuts so far; the risk to our call is an earlier-than-expected rate cut in March. We see 100bps of reserve requirement rate (RRR) cuts this year.”

“We keep our growth forecast for 2020 unchanged at 6.3%.” 

“We revise our 2020 average inflation forecast to 3.7% from 3.3% prior (2019: 2.5%) on a low base and increased domestic activity.”