The Philippines central bank (BSP) cut its policy rate by a further 25bp to 4.0% today, taking the overnight rate back to the trough of the previous cycle. Lower interest rates are needed to support the economy, which has been hit by a slump in exports, and also to deter “hot money” inflows. With global growth likely to disappoint in 2012, we expect one more rate cut before the end of the year.
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