Philippine central bank cuts interest rate to 4.25% 1

Bangko Sentral ng Pilipinas yesterday cut its benchmark interest rate by 0.25 percentage points, resuming policy easing after economic growth and inflation slowed.

The central bank reduced the overnight borrowing rate to 4.25 percent, it said in a statement.

Twenty-three of the 26 economists surveyed by Bloomberg predicted the decision.

The move came a day after central banks in India, New Zealand and Thailand surprised with their rate decisions as policymakers take stronger steps to counter global economic risks.

The US Federal Reserve’s rate cut last week has given Asian central banks room to pursue looser monetary policy.

Philippine government data released earlier yesterday showed that the nation’s economy grew 5.5 percent last quarter, the slowest pace in more than four years and well below the median estimate of 5.9 percent in a Bloomberg survey of economists.

Briefing reporters in Manila, Philippine Secretary of Economic Planning Ernesto Pernia cited the El Nino weather pattern, the US-China trade dispute and the delayed national budget as challenges for the economy.

The government might have to revisit its economic targets — “just to be realistic about what we expect this year” Pernia said — even as he said GDP growth could still reach 6 to 6.5 percent for the full year.

The central bank cut interest rates by 25 basis points in May and paused in June.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno said earlier this week that he sees about 50 basis points of interest rate cuts for the rest of the year.

Inflation eased to a two-year low of 2.4 percent last month from 2.7 percent in June.

Benign inflation due to lower food prices, easing oil costs and a high statistical base effect leaves room for further monetary easing, economists said.