The Bangko Sentral NG Pilipinas (BSP) It is expected that it will resume his rate-cutting cycle in April after slower than expected inflation in February, analysts said.
In a report, Pantheon Macro -economy Chief Said Asia -economist Miguel Chanco said the “door is now wide open for the BSP to resume in April.”
“Given the low inflation environment, we see a possible policy rate reduction during the next meeting of the monetary board in April,” said Metropolitan Bank & Trust Co. research. (Metro bank).
Inflation of the headline decreased sharply in February to 2.1% of 2.9% in January and 3.4% a year ago. This also marked the slowest inflation print in five months.
This brought the average inflation to 2.5% in the first two months, well within the target of 2-4% of the central bank.
Pantheon expects that inflation will establish this year at 2.7%, because the risks for inflation -front views will be tilted to the disadvantage.
Nomura Global Markets research analysts Euben Paracuelles and Nabila Amani also expect inflation to have an average of 2.7% this year.
On the other hand, the Inflation forecast of MetroBank is 3.1% “with large shocks on the supply side.”
The Central Bank said that the risks for inflation -prospects for this year and the following year have become “wide balanced”. The BSP expects inflation to have an average of 3.5% this year.
Analysts said the prospects within the target inflation can continue the BSP.
Mr Chanco said that their baseline display requires a rate reduction during the Meeting of the Monetary Council of 3 April.
“Moreover, we believe that the BSP will cut a total of 100 basic points (BPS) Seniors up to 4.75%, a 25-BP cutback than the consensus currently expected, “he added.
This year, Nomura expects a total of 75 bps of cuts due to the meetings of the monetary board in April, August and December.
“BSP still assesses the pass-through of the weakening of FX (Deviezenbeurs) as limited and has enough FX reserves to intervene and the volatility of the Stengeluuruta, and we think it will maintain a laissez-faire approach to the FX policy,” it added.
Despite the fact that the benchmark rate is stable at 5.75% during the policy evaluation in February, BSP governor Eli M. Remolona, Jr., said they are still in the relaxation.
He signaled the possibility of a maximum of 50 bps in tariff reductions this year.
The central bank fell the loan costs with a total of 75 BPS last year due to increases of 25 BPS during the last three meetings of the year.
GlobalSource Partners Land analyst Diwa Guinsigundo said that the lower February inflation will have a “material influence on both the (BSPs) basic line and the risk-corrected inflation forecasts for 2025 and 2026 unless a major surprise contractions that favorable factor.”
“Anchored about this, and assuming that the risk -balance starts to turn to the center, or the disadvantage, it can be expected that the BSP is expected to have facilitated his monetary policy position.”
However, Mr Gudigundo said: “Some precautionary measure is crucial.”
“We cannot reject the pressure on the brewing price in the US due to the Trumpian higher rate (more expensive input), tax cuts (more expenditures) and strictly immigration policy (higher labor costs). They are all potential inflationary. ‘
Reuters reported another postponement of taxes aimed at Mexico and Canada, announced by President Donald J. Trump, offered little relief to whiplashed markets on Thursday.
The exemption expires on 2 April when Mr. Trump said that he will impose mutual rates on all American trading partners.
“The American Fed would then be more cautious in its relaxation of the Enlightenment that if the BSP applies its flexibility to alleviate the monetary policy at least twice during the year, any reduction of the interest difference with the US could cause capital flows and weakness in the PESO,” said the Heer Guinsigundo.
FED chairman Jerome H. Powell said on Friday that the US central bank will not be in a hurry to lower the rates, while waiting for more clarity about how the policy of the new Trump administration influences the economy.
Mr Gudigundo said that American inflation could “act again” because the global oil markets can be disturbed.
“Indeed, nobody wins in a trade war, and higher, although elusive inflation could be silent evidence,” he added. – Luisa Maria Jacinta C. Jocson