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Philippines: 25bp Rate Cut to 5.5% (Consensus 5.5%) in Apr-25

• The BSP cut its policy rate by 25bps to 5.50%, aligning with expectations and marking a shift towards accommodation following the unexpectedly hawkish February hold.
• Substantial downward revisions to inflation forecasts, with 2025 inflation now seen at just 2.3%, support the easing decision and suggest scope for further rate reductions.
• Despite a dovish tilt, the BSP signalled a cautious, data-driven approach to additional cuts, with external headwinds and inflation risks dictating the pace of monetary easing.

Trump-ism And East Asia

• Donald Trump’s abandonment of the US-led international order and efforts to reshape global trade and finance do not bode well for East Asian economies that may find themselves forced by Washington into a Chinese sphere of influence as part of a grand bargain with Beijing.

By Alastair Newton

Philippines: Policy Rate Held At 5.75% (Consensus 5.5%) in Feb-25

• The BSP held its key rate at 5.75%, contradicting market expectations of a 25bp cut, citing persistent global economic uncertainties and a stable inflation outlook.
• Inflation risks for 2025 and 2026 are balanced, though upside pressures from utilities and downside risks from lower rice tariffs remain.
• The BSP signalled a cautious, data-dependent approach to easing, with future rate cuts contingent on further clarity regarding inflation trends and global economic developments.

Philippines Policy Rate 6.25% (consensus 6.5%) in Aug-24

• The BSP's decision to cut the policy rate by 25 basis points to 6.25% defied consensus expectations. This strategic shift towards a less restrictive monetary policy responds to an improved inflation outlook.
• Domestic demand remains solid, and the economic environment is favourable, with strong GDP growth and declining unemployment.
• Future policy decisions will focus on balancing inflation risks with economic growth, with the BSP remaining vigilant and ready to adjust its stance based on evolving macroeconomic indicators.