CUTTING key interest rates in August will be too soon, and the Bangko Sentral ng Pilipinas (BSP) should wait until inflation slows even further or the US Federal Reserve (Fed) starts easing, analysts said.
CUTTING key interest rates in August will be too soon, and the Bangko Sentral ng Pilipinas should wait until inflation slows even further or the US Federal Reserve starts easing, analysts said.They warned of the potential impact on the peso and said that monetary policy should remain tight until the country's fundamentals further improve.The currency plunged to the P58:$1 level last month after BSP Governor Eli Remolona Jr. indicated that an August rate cut was likely.
''Though both inflation and the trade deficit are improving, they are still at levels that warrant policy restrictiveness,' it continued.'Moving ahead of the US Fed or even in perfect lockstep can, in our view, exert depreciation pressure on the PHP .'The currency continues to trade in the P58:$1 level but gained for a second day on Friday to P58.61 after hitting an over 20-month low of P58:86 on Wednesday. Remolona on Thursday said the BSP had acted to prop up the peso.
Say August Rate Cuts Will Be 'Too Early'
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