CEBU — More interest rate cuts can be expected as the Bangko Sentral ng Pilipinas (BSP) is still in an easing mode, its top official said, but a pause next month cannot be ruled out just yet.
"We're still in the easing cycle ... either we cut in December or we cut in the next meeting, but it will be gradual," central bank Governor Eli Remolona Jr. told reporters at the sidelines of a forum on systemic risk on Tuesday.
"We don't want to be aggressive," he added.
Asked if they could hold off from cutting key interest rates next month, Remolona replied: "Yes, of course. It depends on the data [and] we are still not sure about December."
The BSP's benchmark rate currently stands at 6.0 percent following two 25 basis point (bps) cuts in August and October. Most analysts expect another 25-bps reduction to be ordered on Dec. 19, especially with economic growth having markedly slowed in the third quarter.
Remolona said that growth was expected to rebound in the fourth quarter and that inflation would remain within the 2.0- to 4.0-percent target, which would warrant a continued easing.
Third-quarter gross domestic product (GDP) growth was lower than expected at 5.2 percent, decelerating from 6.4 percent three months earlier. The year-to-date average of 5.8 percent falls below the government's 6.0- to 7.0-percent target for 2024.
Inflation, meanwhile, picked up to 2.3 percent in October from 1.9 percent.
While some analysts have said that peso volatility could prompt the BSP to hold off from cutting interest rates further, Remolona said they "don't worry so much about whether the peso depreciates/appreciates, we worry about the pass-through effect."
The peso fell to the P58:$1 level last month as the greenback strengthened in anticipation of White House return for former US president Donald Trump.
The currency continues to trade at that level amid worries over the Fed's policy direction and possible protectionist policies by the US following Trump's win earlier this month.
It closed at P58.81 to the dollar on Tuesday, weakening by 13 centavos.
The BSP chief said that the central bank had intervened last week, saying that it was "in and out in small amounts," but reiterated that "it's not that important to us."
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