Finance Secretary Ralph Recto said that adjusting the borrowing costs might still occur later this year depending on the monetary board meeting on Thursday and the outcome of the gross domestic product (GDP) for the second quarter of the year.
Recto said this in a press conference at the Kapihan sa Manila Bay on Wednesday, August 7, where he said he is still expecting to cut key policy rates within the year.
“It’s just a matter of timing,” Recto said, noting that a reduction of 50 basis points in policy rates is still on the table for this year.
“So what we are talking about is August or September, but it will still go down,” Recto added.
The BSP now only has three more scheduled policy meetings this year: August 15, October 17, and December 19; the number of rate-setting meetings for 2024 dropped from eight to seven.
The BSP maintained the bench target reverse repurchase rate at 6.5 percent, a 17-year high in its last meeting in June.
When asked for explanation regarding policy rate reductions, Recto said “August, it could happen in off-cycle, it could happen at the next board meeting.”
Following the July inflation, which turned out “slightly worse than expected,” Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. said on Tuesday that a rate drop this month was “little less likely.” Earlier, the BSP governor made hints about an August rate drop.
The country’s headline inflation rate surged to 4.4 percent in July, faster than the 3.7 percent increase last June.
Though it exceeded the 2.0 percent to 4.0 percent target, the July inflation report nonetheless fell within the estimate of 4.0 percent to 4.8 percent by the BSP. (TCSP)
