In amazing move, the PSP keeps the main rate smoothly

Manila, Philippines – Bango Central NG Philipinas (BSP) quoted the need to protect the economy and inflation perspective against the “unusual” uncertainty from global trade advances after the market expectation after the policy rate was smooth on Thursday.

At its first policy meeting this year, the powerful monetary board decided to keep the benchmark rate used as a guide when the banks usually priced loans at 5.75 per cent.

The decision was surprised to the market, which had another leg -point reduction, including the majority of economists in a investigator poll. It also stopped three straightforward meetings of interest rate cuts worth 75 basic points.

Read: The BSP is holding the standard, amazing market

But at a press conference, BSP Governor Eli Remolona Junior emphasized that the central bank has not yet been made with its relaxation campaign, but he explained that the Philippines should be defended against a new kind of uncertainty brought by US President Donald Trump’s trade policies.

That is, at its next policy meeting on April 3, the BSP will consider pressing the back button again and said that Remolona said that the central bank would only be easily eased when the uncertain cloud was clarified.

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A jumbo reduction for bank reserves further enhance economic growth is still on the table this year, he said.

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“In general, we would have reduced further, but something has changed. The uncertainty of what is happening worldwide, especially the uncertainty of trade policy,” Remolona said.

“We face an extraordinary event based on the uncertainty of policies. Our models don’t like those things well,” he added.

Balancing

For many market audiences who pencils another cut yesterday, local economic conditions were ripe for further relaxation.

One, the growth of GDP in 2024 (in GDP) – a year of disruption from the powerful hurricane – on average, 5.6 per cent, the state’s target and market consensus.

Moreover, many researchers believe that the BSP has enough space to focus more on development. Due to the decline in rice prices and the slow increase in utilization costs, 2 to 4 per cent of the BSP showed that inflation is 2.9 percent steady within the target band.

But Remolona argued that growth opportunities “constantly”, despite external headaches, the economy is still strong enough to expand at least 6 percent this year. The Bahujan Samaj Party boss has also urged the Bahujan Samaj Party boss to “be widespread” from this year and next to the inflation.

Overall, Remolona said yesterday’s decision was the product of the “most difficult” balancing process between inflation and growth.

“In general, inflation concerns of the Bahujan Samaj Party gains a huge weight. This is the framework of our policy class, but we take growth, ”he said.

“We do not want to lose the release unnecessarily. If we are able to manage, we want to reduce inflation without cutting out of the release. That’s an act of balancing,” he added.

In a comment, the senior Asian economist of the capital economy, Gareth Leather, believes that “aggression” is still needed, especially if inflation is controlled.

“Overall, we expect a total of 100 pps cuts in 2025. Our forecasts are greater than consensus.”