Goldman Sachs sees quarter BSP interest rate cut on Aug. 28

MANILA, Philippines — Yet another research group is betting on a reduction in interest rates later this week, chasing hints that the Bangko Sentral ng Pilipinas (BSP) dropped earlier.

The BSP itself has gone on a “quiet period” in the run-up to Aug. 28 when the Monetary Board announces its latest policy stance.

In a forum organized by the Economic Journalists Association of the Philippines held on Aug. 11, BSP Governor Eli Remolona Jr. said there might be two more rate cuts this year. He said one of these was “quite likely” to happen this month.

The research team at Goldman Sachs noted Remolona’s comment while also citing subdued inflation and muted domestic activity.

GS Economic Research expects the BSP’s benchmark rate to go down by 25 basis points and settle at 5 percent. This is also the consensus among analysts polled by Bloomberg.

Goldman Sachs echoed other groups in noting that headline inflation in the Philippines had fallen further in July to 0.9 percent. This was the lowest readout in nearly six years.

The July print also marked the fifth straight month that the growth rate of prices was below the BSP’s target band of 2 percent to 4 percent.

“We continue to expect inflation to remain subdued in the remainder of 2025 as food prices inflation continues to be low driven by rice prices,” Goldman Sachs said.

Quiet period

“Meanwhile, domestic activity slowed in [the second quarter] on moderation in government spending and investment growth as global uncertainty weighed on investment decisions,” it added.

In a social media post, the BSP said it observes a quiet period that lasts seven calendar days before each scheduled meeting of the central bank’s highest body on its monetary policy stance.

During such a period, “BSP officials and technical staff are expected to refrain from publicly discussing current and prospective monetary policy issues and decisions,” the central bank said.

“Only information cleared for publication and released to the public before the quiet period may be provided,” it added. “Other central banks also observe quiet periods.”

The BSP said the purposes of such periods include enhancing and ensuring the clarity of the BSP’s forward guidance on interest rates.

They are also intended to provide policy flexibility as key economic information comes in. Another purpose is to ensure the orderly announcement and release of monetary policy decisions.

The BSP is careful about this as businesses and other organizations, as well as individuals, make crucial decisions based on information about the direction of interest rates.

(2025/08/25-02:14)

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