INTEREST rate cuts are likely to be ordered before the year ends once inflation is firmly within target, a senior Asian Development Bank (ADB) official said last week.

"The Bangko Sentral ng Pilipinas (BSP) is expected to ease its monetary stance in the second half of this year when inflation stabilizes within its 2.0 to 4.0 percent target range," ADB Country Director Pavit Ramachandran told reporters on Friday.

The central bank's benchmark rate currently stands at an over 17-year high of 6.5 percent, the result of 450 basis points of increases beginning May 2022 after inflation started surging in the wake of Russia's invasion of Ukraine.

BSP Governor Eli Remolona Jr. has been saying since May that rate cuts could start in August, ahead of the US Federal Reserve, given improvements in the inflation outlook.

The Manila-based ADB has retained its inflation forecasts for this year and next year at 3.8 percent and 3.4 percent, respectively, both within the 2.0- to 4.0-percent target.

The only upside risks to the inflation outlook are "higher transportation charges, higher world oil prices, and disruptive impacts of La Niña and other severe weather events on food prices," Ramachandran said.

Consumer price growth in the wider region is also expected to slow, and the ADB noted in the July update to its Asian Development Outlook (ADO) that prices of key food items such as meat, fish, pork, short mackerel, sea bass and fresh vegetables had fallen due to increased supplies.

Policy rate cuts and easing inflation, Ramachandran said, could boost household spending and capital expenditures and thereby boost economic growth.

Private consumption, which makes up three-fourths of the local economy, is expected to remain the main growth driver this year and in 2025, supported by low unemployment and resilient remittances from overseas workers.

"Public investment is projected to remain brisk with large infrastructure projects underway, while public consumption is expected to pick up with ongoing measures to improve budget execution," Ramachandran also said.

The ADB maintained its 2024 and 2025 growth projections for the country at 6.0 percent and 6.2 percent, respectively.

Ramachandran cited steady growth in the first quarter and positive trends for key indicators like vehicle sales and exports as reasons for the unchanged forecasts in the July 2024 ADO.

The forecast for 2024 falls within the government's 6.0- to 7.0-percent target, but that for next year is short of the 6.5- to 7.5-percent goal.

Gross domestic product growth slowed last year to 5.5 percent, below the government's 6.0- to 7.0-percent goal.

It picked up in the first quarter to 5.7 percent but was again short of the target. Government officials, however, have stressed that the result was still one of the highest in the region.