BIZ BUZZ: Surprise, surprise
The past few days, everybody was already pricing in the possibility that the Bangko Sentral ng Pilipinas (BSP) would keep rates steady.
Supposedly, this was because officials were still waiting for clarity on the state of the Philippine economy, as well as the local currency.
But in a surprise move, the BSP opted to cut rates for overnight borrowing by another 25 basis points to 4.75 percent on Thursday.
This is the lowest it has been since September 2022, and most observers were stunned.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the BSP’s fourth cut of the year was, indeed, a surprise.
Still, he said this was a “justified” move, especially since inflation remained “benign” and below the government’s target range of 2 to 4 percent.
Apart from that, Ricafort told Biz Buzz the reduction may also be because of the “stable peso exchange rate.”
The day before the BSP’s decision, the peso was at 57.95 against the US dollar. However, it did close beyond 58 again.
The question now is whether the BSP would price this in during its next meeting in December, during which Ricafort sees another “possible” rate cut to match the Federal Reserve. Abangan!
