Recto expects BSP to cut rates by 50-75 basis points

Finance Secretary Ralph Recto of the Philippines expects a significant cut in interest rates at the upcoming Bangko Sentral ng Pilipinas (BSP) meeting on April 10. He mentioned a "high probability" of a reduction of 50 to 75 basis points as he aims to lower borrowing costs and support economic growth. In a recent interview, Recto, who is part of the BSP's Monetary Board, expressed that easing the current overnight borrowing rate from 5.75 percent could boost the economy by at least half a percent. He believes that due to controlled inflation, there is room for a rate cut in the next meeting. Recto anticipates that the economy could grow by 6 percent in 2025, especially during the election year, despite existing political tensions. Government data shows that the gross domestic product (GDP) grew by an average of 5.6 percent in 2024. This was slightly better than the 5.5 percent growth in 2023 but fell short of the revised target of 6 to 6.5 percent set by the Marcos administration. The government aims for GDP growth of 6 to 8 percent until the end of President Marcos' term in 2028. Some analysts indicate that a slow rate-cutting cycle could hinder stronger economic growth. Earlier this year, the BSP chose to keep rates steady due to uncertainties involving U.S. tariffs. However, recent reports show that inflation has eased more than expected, potentially allowing for further cuts in borrowing costs. Recto also noted that the government has secured its foreign borrowings early this year, having raised $3.25 billion from bond sales in January to cover financial needs for the year.