THE latest decision of the United States Federal Reserve to reduce policy rates by 50 basis points (bps) may prompt the Bangko Sentral ng Pilipinas (BSP) to implement larger rate cuts.
THE latest decision of the United States Federal Reserve to reduce policy rates by 50 basis points may prompt the Bangko Sentral ng Pilipinas to implement larger rate cuts.
“With reduced concerns about yield differentials against the US, Asia central banks will likely be encouraged to cut policy rates over the next six months. We think that China’s PBOC, Philippines’ BSP and Indonesia’s Bank Indonesia will cut further in the upcoming meetings,” SMBC said. SMBC said there could be some potential for modest gains in Chinese Yuan , Malaysian Ringgit, Singapore Dollar, Thai Baht, South Korean Won, and New Taiwan Dollar.
“Some central banks are likely to be concerned with the pace of currency rebound against the USD. Others, like BI and BSP, will take the opportunity to cut policy rates, maintaining stability in yield differentials and limiting the scope of more currency appreciations,” SMBC said.
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