Recto: Rate cut possible in April

Crucial to hitting 6% growth target

MANILA, Philippines — There is a higher probability that the Bangko Sentral ng Pilipinas (BSP) may return to its easing cycle next month as doing so is crucial in attaining at least six percent economic growth for 2025, according to Finance Secretary and Monetary Board member Ralph Recto.

In an interview with Bloomberg TV yesterday, Recto said that a rate cut is possible in April after BSP’s surprise pause last month.

“It would appear that because inflation has been controlled in the Philippines, there is room for a rate cut,” Recto said.

“We are in an easing cycle. It’s a high probability that we could do a rate cut in our next meeting,” he said.

During its first policy meeting for the year, the BSP surprised the market after it deviated from the consensus and kept borrowing costs unchanged at 5.75 percent.

Last week, BSP Governor Eli Remolona Jr. said the central bank is still taking a cautious approach in terms of policy easing.

For this year, Recto said the BSP may deliver at least 50 basis points to as much as 75 basis points in rate cuts to help propel growth, consumption and investments moving forward.

The finance chief emphasized that the BSP’s continued easing cycle is an important factor for the economy to hit at least the lower end of the six- to eight-percent gross domestic product (GDP) growth this year.

“During the last decade, we were growing at an average of 6.4 percent when (interest) rates were (around three percent). Now, the policy rate is at 5.75 percent. If we can get that down and reduce it in the next two years by 150 basis points or probably even higher, plus (get) more investments, then we could grow up to seven percent or even higher,” Recto said.

Recto is confident that GDP could grow by at least six percent amid good macroeconomic fundamentals, declining unemployment, a growing middle class and increased infrastructure investments.

He said that election-related spending would also provide a significant boost in the economy.

Recto admitted that the global environment has been challenging, but he remains optimistic that domestic consumption will boost economic expansion.

The Organization for Economic Cooperation and Development  earlier downgraded global prospects for the year following trade wars initiated by US President Donald Trump.

“The headwinds are that global growth may slow down, but 72 percent of our economy is domestic and consumption-driven. Our BPO (business process outsourcing) is growing as well as our remittances. Tourism is also improving,” Recto said.

Meanwhile, Recto has dismissed the possibility of another global bond issuance, noting that the Philippines has already frontloaded the foreign exchange that it needs.

Last January, the Philippines raised $3.3 billion from the issuance of dollar and euro-denominated sustainability bonds.

“I think we’ve got it covered already for the year, our balance for the year is very small, maybe $250 million to $500 million, very minimal left,” Recto said.

“We still have program loans and project loans for infrastructure with our ODA (official development assistance) partners, so that’s part of the financing,” he said.