BSP key rate seen at 5% by mid-2025

The Bangko Sentral ng Pilipinas (BSP) could deliver two more 25-basispoint rate cuts this year and 75 basis points worth of easing in early 2025 as inflation is likely to remain within target until 2026, according to Metropolitan Bank & Trust Co. (Metrobank).

- KEISHA TA-ASAN

In a report, Metrobank chief economist Nicholas Mapa said this would bring the target reverse repurchase rate down to five percent from the current 6.25 percent. But the outlook will still depend on growth and inflation conditions for the next two years.

"If inflation remains well-behaved, the US Fed proceeds with three rate cuts and growth remains constrained, we could see the BSP cutting rates by another 50 basis points before the end of the year," Mapa said.

He said the central bank has scope to ease given the latest economic growth data.

"Given the BSP's forecasts pointing to inflation remaining within target all the way through to 2026, we believe that the BSP has the price stability objective in hand for the moment," he added.