MANILA — Philippine Finance Secretary Ralph Recto, who sits on the central bank’s monetary board, said on Tuesday the monetary authority can afford to slash interest rates further and match the size of the U.S. Federal Reserve’s rate cut.
“The Fed reduced by 50 basis points. I think we can also do half a percent,” Recto a told media briefing.
Inflation would likely ease to 2.5% in September, he said, the slowest in nearly four years, after rising at an annual pace of 3.3% the previous month. Recto said that could settle at 3.4% this year, within the central bank’s 2% to 4% target range.
Slowing inflation allowed the central bank to cut its benchmark borrowing rate PHCBIR=ECI by 25 basis points to 6.25% in August, its first rate cut since November 2020, ahead of major central banks, including the Fed.
The Fed started cutting rates on Sept. 18 with a larger-than-usual half-percentage-point reduction, which will likely be followed by 25 basis points cut in both November and December, according to a Reuters poll.
Bangko Sentral ng Pilipinas Governor Eli Remolona had earlier flagged there was room for one more interest rate cut this year. The BSP’s next meeting is on Oct. 17.
—Reporting by Mikhail Flores; Editing by Martin Petty
