MANILA -- A banking official on Friday expressed confidence that upcoming monetary policy adjustments will likely remain supportive of growth as inflation gets “under control.”

Speaking to reporters during the Digital Financial Inclusion Awards, Citi Philippines Chief Executive Officer Paul Favila said as far as interest rate cuts are concerned— it is no longer a question of if, but how fast the Bangko Sentral ng Pilipinas (BSP) keeps them coming.

The BSP has slashed interest rates by 25 basis points for two straight meetings now, bringing the key rate to 6 percent. 

It will hold another policy meeting on December 19, 2024. 

Bangko Sentral cuts benchmark rate by 25 basis points

“The BSP may choose to slow things down a bit to err on the side of caution. But it does not move away from the real intent which is to gradually loosen policy over time, which, again, is going to be supportive of growth,” said Favila.

Favila also believes inflation in the Philippines will remain under control going into 2025.

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“We’ve seen the impact of the most recent spate of storms. That put a little pressure on inflation as anticipated. It did not really go out of control. I think things are still very much within the comfort zone of the Bangko Sentral,” he said.

With inflation no longer that big of an issue, Favila said the Philippines’ economic fundamentals are relatively strong— even from the perspective of international observers.

“I’m most hopeful. If you would recall, two weeks back, S&P did raise the outlook for the Philippines and essentially opened a pathway for a potential upgrade. I think that is a very strong indicator of how we are also being viewed externally which is very very important,” he said.

He sees consumption and consumer-driven credit growth to remain as the economy’s main drivers in 2025.

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According to Favila, another indicator for economic activity is loan growth.

The latest BSP data showed that bank lending recorded a double-digit growth in October this year, expanding by 10.6 percent.

“I don’t see any reason for that to slow down. As long as the NPLs (non-performing loans) remain relatively low, then I think we’re in a good place,” he said.

He also does not expect any blowup in NPLs.

“It’s been low for quite an extended period of time despite the credit growth so that means things are nice and good,” he added.

Meanwhile, he said persisting risks include geopolitics and possible trade policy shifts.

“We have a change of leadership in the United States and, of course, we anticipate some changes in policy but how it will actually be carried out is, I think, the more critical piece rather than what’s being said,” he noted.