Analysts see BSP terminal rate down to 5% next year By Cai U. Ordinario @caiordinario
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POLITICAL PERSPECTIVES AT ROTARY Rotary Club of Manila President Jujut Enriquez, George Drysdale (Chairman, Republican Overseas Philippines), and James Savage (Chairman, Democrats Abroad Philippines) engage each other on the impact of international developments on local economies at the 13th Weekly Membership Meeting of the Rotary Club of Manila. NONIE REYES
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IVEN the latest monetary policy action of the Monetary Board, international and local analysts expect the Bangko Sentral ng Pilipinas (BSP) terminal rate to be brought down to 5 percent next year. On Wednesday, the BSP reduced the Target Reverse Repurchase (RRP) Rate by 25 basis points, bringing key policy rates to 6 percent. (See: https://businessmirror.com. ph/2024/10/17/monetary-board-eyeingbaby-steps-in-rate-tweaks-in-2025/). Analysts expect this to be fol-
lowed by several 25-basis point reductions in the policy rate until mid-2025. Some analysts, though, are seeing that a pause in monetary policy action is also possible in December. “Given the persistently weak private consumption and improving inflation outlook in the near term, we now think that the BSP will cut its policy rate by 25bp to 5.75 percent at its meeting in December 2024. We are keeping our terminal rate forecast unchanged at 5 percent,” ANZ Research said. HSBC Asean economost Aris Dacanay shared the same outlook
and noted that a policy rate of 5 percent by the second quarter next year remains higher than pre-pandemic levels. Dacanay expects the BSP to deal another 25-basis-point rate cut in the Monetary Board's final meeting for the year, in December, to bring the RRP to 5.75 percent by yearend. He also said HSBC's expectations include another reduction in the Reserve Requirement Ratio (RRR) for banks by next week or October 25, which will bring it down to 7 percent from the current 9.5 percent.
This will contribute to the country's growth prospects as a lower RRR would provide banks with additional fiscal space to extend loans. However, Dacanay said in terms of making investments, timing remains an issue. “Both the rate cut and the RRR cut should help bolster growth as the rate cut incentivizes borrowing while the RRR cut frees up bank deposits for lending. But timing may be an issue and we think there may be [a] lag to this boost,” Dacanay said.
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Friday, October 18, 2024 Vol. 20 No. 9
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TO IMPACT GLOBAL TRADE D
By Andrea E. San Juan @andreasanjuan
EVELOPED countries should consult developing countries such as the Philippines in crafting global sustainability rules to prepare these markets for the impact of stringent regulations that may hamper global trade, according to a United Nations official. “A lot of European Union regulations are coming out, the [EU] deforestation [regulation] is one example of it. But we also have corporate sustainability due diligence directive that was adopted early this year,” Surya Deva, UN Special Rapporteur on the Right to Development, told reporters on the sidelines of the 16th Investment Policy Forum held in Pasay City on Wednesday.
“I think some of these regulations have a good intention, but the difficulty I see is in terms of the process—that whether the countries in, let us say, in the global south or in Asia, were they consulted properly before these regulations were pushed forward by the European Union?” Deva pointed out. See “Sustainability,” A2
PERSONAL NETWORK TOP SOURCE OF PINOYS’ CREDIT KNOWLEDGE
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ERSONAL networks such as families remain the preferred source of credit knowledge among Filipinos, especially those living in rural areas, according to the latest survey of TransUnion. The latest Credit Perception Index (CPI) study showed family and friends ranked highest among the sources of information on credit products. This includes majority or 63 percent of Filipinos living in the suburbs and 60 percent of those living in rural areas. They said family and friends were their source of information for credit products. “Urban residents demonstrate a stronger understanding and thus preference for credit products compared to those in more rural regions, potentially due to differing sources of credit information,” said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion. “Given that suburban and rural residents rely more on
their personal networks for credit information, this may limit their exposure to the latest credit trends and professional insights,” he added. Majority or 61 percent of Filipinos living in rural areas are also less trusting of credit-based products. As such, only 58 percent of them are inclined to use credit-based products. In terms of their understanding of credit, majority or 63 percent of Filipinos in rural areas know that credit is the ability to acquire goods or services with payment to be made later. In terms of specific creditbased products such as credit cards, loans, and installment payments, only 51 percent of Filipinos living in rural areas are aware of these products. TransUnion said these results bear the gains of financial inclusion initiatives through the years but also highlight the need to further financial inclusion efforts, especially in rural areas. See “Personal,” A2
BOUND BY COMMON GOAL President Ferdinand Marcos Jr. shakes the hand of former vice president Leni Robredo, his political rival in 2016 and in 2022, as he arrives to grace the inauguration of the Sorsogon Sports Arena (SSA), on Thursday, October 17, 2024. With its 12,000 seating capacity, the SSA is currently one of the biggest event venues in the Bicol Region. Marcos lauded the completion of the new infrastructure, while exhorting everyone to unite for a common goal of uplifting the living standards of the people. Senate President Francis “Chiz ” G. Escudero, who accompanied Marcos in the SSA, said Robredo was in Sorsogon to attend the Kasanggayahan Festival and conduct benchmarking initiatives within the province. Among those with Robredo was former senator Bam Aquino, while Marcos Jr. was joined by some members of the administration slate for 2025, including Rep. Camille Villar. Story on Economy, A3, “Marcos reiterates call for unity.” PHOTO COURTESY OF PCO
Geopolitical risks sparking race for natural resources
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OUNTR IES within Asia, Latin America, among others, should strengthen their investment policies as ongoing geopolitical risks are resulting in a “fierce” competition in the area of trade and access to natural resources such as nickel and lithium deposits, which play a crucial role in energy transition, according to a global think tank. “There is a fierce competition in the area of trade and access to natural resources, including to the minerals needed for the energy transition. This coupled with persistent crises, financial instability, climate emergencies, wars, all of this is impacting trade and invest-
ment flows,” International Institute for Sustainable Development (IISD) Vice President Nathalie Bernasconi-Osterwalder said during the 16th Investment Policy Forum on Wednesday. Osterwalder added that these global developments should prompt countries to revisit their investment policy framework as countries such as China, India and Western economies are competing to ensure they have access to critical minerals which are present in Asia, Latin America and Africa, which are deeemed as having the “biggest copper nickel and lithium deposits.” See “Geopolitical,” A2
PESO exchange rates n US 57.8240 n japan 0.3866 n UK 75.1423 n HK 7.4415 n CHINA 8.1217 n singapore 44.0597 n australia 38.5455 n EU 62.8258 n KOREA 0.0424 n SAUDI arabia 15.3971 Source: BSP (October 17, 2024)