THE weakening of the US dollar against the Philippine peso due largely to market uncertainties caused by the Trump administration’s tariff policies is seen as a leeway for the Bangko Sentral ng Pilipinas (BSP) to cut rates further.
In an online briefing on Thursday, April 24, EastWest Bank chief executive officer Jerry Ngo said upticks of commodity prices in the US are seen in the near term as a result of the US’ higher reciprocal duties on trade partners.
The situation has resulted in the weakening of the US dollar against the local currency and the rally in the local bourse.
The current development gives the central bank “more leeway to cut rates,” Ngo said. “And the reason for that, you don’t have to worry too much about the dollar strengthening versus the peso and creating that inflationary pressure from that point.”
He explained that the upticks in the prices of commodities in the US to date are artificial primarily because of the new tariff regime.
“This could help the country. Deliberate, judicious approaches are probably the right way to go about it… And I have good faith and confidence in our leadership in the central bank,” he added.
On April 10, the BSP’s policy-making Monetary Board reduced by 25 basis points the central bank’s key rates after citing a more manageable inflation outlook and the challenging global environment, factors that provided space for additional easing in the central bank’s key rates.
This brought the BSP’s Target Reverse Repurchase Rate to 5.50 percent, the interest on the overnight deposit rate to 5 percent and the overnight lending facility to 6 percent.
BSP Governor Eli Remolona earlier indicated additional rate cuts in the coming months, which economists support due to expectations of a slowdown in the domestic inflation rate and fragile global economy. (PNA)
