Philippine Central Bank Signals Easing On Course After Trump Win

The Bangko Sentral ng Pilipinas (BSP) has reassured investors and stakeholders that its monetary easing path remains on track, despite the potential implications of a Trump administration on the Philippine economy. In a recent interview, BSP Governor Eli Remolona expressed confidence in the central bank's ability to navigate the challenges posed by US protectionist policies and maintain a stable economic environment.

The BSP has been actively engaged in a monetary easing cycle, with two consecutive 25 basis point interest rate cuts this year, bringing the benchmark rate to its lowest level since February 2023. Remolona has indicated that further rate cuts are likely in the coming months, with a third cut expected either in December or early next year. The central bank aims to lower interest rates by around 100 basis points in total by the end of 2025.

The BSP's easing cycle is supported by a slowdown in inflation, which quickened to 2.3% in October from 1.9% in September but remains within the central bank's 2.0%-4.0% target range. The decline in inflation, driven by a drop in rice prices, has allowed the BSP to continue its easing cycle without compromising its inflation management objectives.

However, a Trump presidency could introduce new challenges for the Philippine economy, particularly in the context of trade and geopolitics. Trump's "America First" policies may lead to increased protectionism, potentially impacting the Philippine BPO industry and its significant employment. Additionally, a more aggressive stance on China could embolden Beijing to assert its claims more aggressively in the West Philippine Sea, destabilizing Philippine trade and security interests.



To mitigate these risks, the BSP must balance its easing cycle with vigilance over potential inflationary pressures and currency stability. While Remolona has expressed no immediate concern about the peso's depreciation, the central bank will likely monitor the pass-through effect of currency movements on consumer prices. The BSP may choose to intervene in the market if sharp swings in the peso pose a threat to inflation management.

In conclusion, the BSP remains committed to its easing cycle, with further interest rate cuts expected in the coming months. However, the central bank must navigate the challenges posed by a Trump administration, including potential risks to inflation and currency stability. By maintaining a balanced approach to monetary policy and closely monitoring economic indicators, the BSP can ensure a stable and predictable economic environment for investors and stakeholders.