Regina Capital Managing Director Luis Limlingan. (File photo courtesy of Mr. Limlingan's Twitter Acct.)
MANILA -- The lower-than-expected growth of the Philippine economy in the second quarter this year should not dampen investors’ risk appetite but all eyes will be focused on how the government addresses this.
This was stressed by Regina Capital Managing Director Luis Limlingan, who noted that the slower 5.5 percent growth, as measured by gross domestic product (GPD), from quarter-ago’s 5.6 percent and year-ago’s 6.2 percent “is over and done with.”
“I think now they are forward-looking as to what the government will do to stimulate growth,” he said.
He explained that the outcome of the Monetary Board's (MB) rate-setting meeting on Thursday is eagerly being awaited by investors.
The MB is expected to slash key rates by at least 25 basis points on Thursday to help boost domestic growth.
Limlingan said it is also possible for the MB to cut rates by 50 basis points during the day but pointed out that “they have to consider that this might push inflation up again.”
Last May, the MB cut the BSP’s key rates by 25 basis points due to sustained drop of domestic inflation rate, which peaked at 6.7 percent in September and October last year.
The Board is expected to slash key rates by at least 25 basis points to help boost domestic growth.
Earlier, BSP Governor Benjamin Diokno said the MB expects to cut rates by additional 50 basis points until the end of the current year.
Limlingan said that aside from rate cuts, the MB is also expected to further slash banks’ reserve requirement ratio after the total of 200 basis points cut from May to July this year.
“Of course, government spending ramp-up is a given,” he added, citing the contribution on the fiscal side. (PNA)
