The research arm of debt watcher Moody’s sees the next interest rate cut by the Bangko Sentral ng Pilipinas (BSP) highly likely in the third quarter after it took a break from monetary easing last week.
“The BSP surprised markets and kept the policy rate on hold at 4.5 percent in June,” Moody’s Analytics said in its June 21 Asia-Pacific weekly report e-mailed to reporters on Monday (June 24).
It said the BSP’s move to stop cutting interest rates was “prudent.”
The BSP took a break from cutting interest rates for fear that it could aggravate an inflation increase attributed to several factors, including the prolonged drought brought by El Nino and the trade war between the world’s two biggest economies, China and United States.
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The move was also taken as a reduction in reserve requirement, or cash in hand, for banks started to go into full effect.
Moody’s said the BSP was “treading carefully given its mandate to maintain price stability, a sensitive issue.”
