In a report, HSBC economist for ASEAN Aris Dacanay said that while the BSP is unlikely to cut ahead of the Fed this year, the British bank noted that the Philippines' monetary policy is becoming more independent from the US central bank.
"We highlight three possibilities that could help the BSP break free, even partially, from the Fed," he said, citing that the current account balance, the real policy rate differential between the two central banks and inflation must be better than pre-pandemic levels.
"If these fundamentals continue to improve and we see the Fed dot plot delaying its first rate cut, perhaps, to next year, the BSP might not necessarily need to follow suit," he said.
According to Dacanay, the Philippines' external fundamentals are improving faster than what many had anticipated amid robust consumption and overseas remittances.
The Philippines' current account deficit narrowed slightly to $1.7 billion in the first quarter from a year-ago level of $4.4 billion, based on BSP data.
This story is from the June 20, 2024 edition of The Philippine Star.
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This story is from the June 20, 2024 edition of The Philippine Star.
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