Standard Chartered Bank expects a more “aggressive policy stance” from the Bangko Sentral ng Pilipinas this year to counter the negative impact of the coronavirus disease 2019 on economic growth.
“We now expect Bangko Sentral ng Pilipinas to cut the policy rate by 25 bps in March, followed by a third consecutive cut in May; we earlier expected only one rate cut,” the bank said in a report Wednesday.
“Global monetary easing following the risk of a more widespread coronavirus outbreak than earlier expected, combined with the likely negative hit to Philippines’ growth outlook, is likely to prompt more aggressive monetary policy from BSP,” it said.
It said the lower-than-expected inflation in February of 2.6 percent, slower than the 2.9 percent a month ago, provided space to ease, reducing worries about potential overheating.
“The risks to our call are balanced; the evolution of the outbreak would drive either more or fewer than the two rate cuts we project. BSP has room to ease further, if required,” the British bank said.
The bank sees a downside risks to its 2020 GDP growth forecast of 6.3 percent, adding it was assessing the extent of the downside impact. It also lowered its 2020 average inflation forecast to 2.9 percent from 3.7 percent prior on its expectation of lower fuel price inflation and reduced domestic consumption.