Policy Rate Cuts Likely Only In Q4 2024 --- BMI

Inflation risks and external sector pressures will likely prompt Philippine monetary authorities to keep a tight watch on interest rates and only begin cutting late next year, BMI Country Risk & Industry Research said.

Photo Insert: Fitch Solutions recently announced that its Country Risk & Industry Research service will be available under the brand name of BMI, a Fitch Solutions company.

The "clear risk," it said in a report, means "policymakers will likely keep financial conditions very restrictive for a while longer."

"This feeds into our expectations for rate cuts to materialize only in the fourth quarter (Q4) of 2024," it added. Inflation is still expected to return to the Bangko Sentral ng Pilipinas' 2.0- to 4.0% target before the end of the year, but BMI warned that the onset of the El Niño weather pattern and the likely impact on food prices could affect the disinflation trajectory.

Preserving the stability of the peso, it added, will be a pivotal factor influencing the BSP's short-term policy choices. It noted that the currency was down approximately 1.9 percent against the dollar so far this year and also presently moving in the direction of its lowest value last year of P59.47:$1.

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