MANILA - More interest rate cuts are expected in the coming months as the inflation rate in the Philippines is expected to stay within the government’s target band of 2 to 4 percent, said Finance Secretary Ralph Recto on Thursday.

Speaking at the Pilipinas Conference 2024 in Makati, Recto said further monetary policy easing is key to boosting the economy after growth slowed in the third quarter.

“The challenge for the Philippine economy is to bring interest rates down so we could have higher growth next year and in the coming years,” he said.

Recto pointed out that the “favorable domestic inflation outlook” has allowed the BSP to cut interest rates by 50 basis points in its last two policy-setting meetings.

But he also acknowledged that food inflation, in particular, remains high.

“The government is doing its best to ensure that we reduce, most especially, food inflation. We’ve reduced tariffs on rice. And hopefully by December to January next year, we will feel the full effects of the reduction in rice tariffication,” he said.

His statement comes after the October inflation print showed that the rice tariff reduction, which the government implemented in July, had yet to result in significant rice price cuts.

Meanwhile, the Philippine Chamber of Commerce and Industry (PCCI) expressed concern about the depreciating value of the Philippine peso, which it believes could be inflationary.

“We’re one of the biggest rice importers. If the exchange rate is high then our importation of rice would be high and that would affect our inflation," said PCCI Chairman George Barcelon. 

He also expressed concern that reducing interest rates may further weaken the peso.

IMPACT OF TRUMP VICTORY

Barcelon said the reelection of Donald Trump as President of the United States may also be good for inflation, if he works to ease geopolitical tensions, such as the war between Russia and Ukraine.

“Two years ago, when that happened, the whole trade route in that area was disrupted. And all the commodity, both food-related and industrial inputs went up sky-high,” he said.

“We import most of these food-related items, and also energy, coal, so that’s a positive development for us if he’s able to (stop the war),” added Barcelon.

Recto also sees this as a possible plus factor.

“If President Trump will be good for global security and if you have less geopolitical tensions and less wars then that should be good for everyone,” he said.