Economist eyes BSP rate cut by May '19

However, ING Bank Manila senior economist Nicholas Mapa noted that a cut is possible by May to address the impact of last year’s rate hikes on domestic output.

In a report Tuesday, Mapa said the central bank’s policy-making Monetary Board (MB) has the leeway to keep key rates steady during their rate setting meet on Thursday since inflation continues its downward path.

During the day, the Philippine Statistics Authority (PSA) reported that the January 2019 inflation further decelerated to 4.4 percent from 5.1 percent last December primarily due to slower rate of price increases of the heavily-weighted food and non-alcoholic beverages index.

Core inflation, which excludes volatile food and energy items, also slowed down to 4.4 percent from 4.7 percent last December.

Mapa said the slower inflation rate is as expected and noted that “any cost push driven inflation pop tends to dissipate quickly once supply bottlenecks are mitigated.”

“This trend will continue in next few months, barring any tightness in food supply or spikes in oil prices,” he said, as he projected inflation to go back to within the 2-4 percent target band by the second quarter of this year.

The economist also cited that slower core inflation “validates that the recent spike is not pervasive and supply side in nature.”