Finance Secretary Ralph G. Recto stated on Wednesday, Aug. 7, that while the reduction of borrowing costs may still take place within the year, it is likely to happen later than August.
During a press briefing at the Kapihan sa Manila Bay, Recto said that the decision to cut key policy rates by August will depend on the monetary board meeting on Thursday and the result of the gross domestic product (GDP) for the second quarter of the year.
“So, do I expect rates to go down within the year? Yes. It’s just a matter of timing. So what we are talking about is August or September, but it will still go down,” Recto said, noting that a reduction of 50 basis points in policy rates is still on the table for this year.
When asked for clarification, Recto maintained that policy rate cuts could happen in “August, it could happen in off-cycle, it could happen at the next board meeting.”
Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. said on Tuesday that a rate cut this month was “little less likely” following the July inflation, which turned out “slightly worse than expected.” The BSP governor earlier hinted at an August rate cut.
The country’s headline inflation rate swelled to 4.4 percent in July, quicker than the 3.7 percent recorded in June and the highest so far this year.
The July inflation readout was still within the BSP’s projection of 4.0 percent to 4.8 percent, but it breached the Marcos administration’s target of 2.0 percent to 4.0 percent.
The BSP now has only three more scheduled policy meetings this year, on August 15, October 17, and Dec. 19, as the number of rate-setting meetings for 2024 was reduced from eight to seven.
In its previous meeting in June, the BSP kept the bench target reverse repurchase rate at 6.5 percent, a 17-year high.