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Philippines Finance Secretary Forecasts Positive Economic Outlook, Hints at Potential Rate Cuts

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BNN Correspondents
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Philippines Finance Secretary Forecasts Positive Economic Outlook, Hints at Potential Rate Cuts

In a recent statement, Finance Secretary Benjamin Diokno of the Philippines projected a promising future for the nation's economy, hinting at potential interest rate reductions by the Bangko Sentral ng Pilipinas (BSP) in the upcoming year. Diokno reaffirmed that the BSP's resolutions are always grounded in economic data, suggesting that current indicators such as declining unemployment, subsiding inflation, and third-quarter growth surpassing predictions illustrate a hopeful scenario.

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Decisions Based on Data

Despite the positive economic landscape, Diokno cautioned that any decision on rate cuts would not be executed impulsively, emphasizing the critical role of data dependency in the BSP's decision-making process. This viewpoint echoed comments from Governor Eli Remolona, who indicated that discussions on easing rates are premature at this stage, with the BSP sustaining the interest rate at 6.5 percent in November following an unscheduled rate increase in late October.

Upcoming Monetary Policy Meeting

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Remolona also hinted at the possibility of the central bank either maintaining or elevating the key policy rate at its December 14 meeting, highlighting the necessity to evaluate ongoing risks before implementing any modifications. The BSP maintains a vigilant stance as it gears up for its final planned monetary policy meeting for the year. The BSP's Monetary Board is poised to meet on Thursday, December 14, for the last time in 2023, during which they may uphold, reduce, or heighten key policy rates.

Anticipated Rate Cuts in 2024

The BSP is anticipated to trim interest rates by the second quarter of 2024, provided that inflation continues on a downward trend despite price pressures on commodities like rice and the holiday season. This outlook aligns with recent commentary from Manulife Investment Management and Trust Corp., which stated that the consensus perspective on inflation is for its ongoing decline. This comes after the average price increase of consumer goods and services further eased to 4.1 percent in November, down from 4.9 percent in October.

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