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The Bangko Sentral ng Pilipinas (BSP) cut its reverse repurchase rate (RRP) as a pre-emptive measure. ANZ researchers are expecting an additional rate cut in the second quarter.

Key quotes

“The Bangko Sentral ng Pilipinas (BSP) cut its overnight reverse repurchase rate (RRP) by 25bps to 3.75%.”

“BSP remains upbeat on domestic growth prospects. Strengthening public consumption and investment boosted growth in Q4 2019 but external headwinds such as trade tensions and more recently the 2019-nCoV outbreak are a key concern.”

“We expect the BSP to undertake one additional 25bp cut this year, likely in Q2. However, a higher-than-expected impact from the coronavirus may extend the easing cycle further.”

“The central bank adjusted its inflation forecast for 2020 upwards to 3.0% (previously 2.9%). (…) Inflation remains manageable and will likely remain within the target band of 2-4%.”