Finance Secretary Ralph Recto said Monday that it is possible for policy rate to be cut by up to 150 basis points in the next two years.

“It seems like inflation is going down. It used to be 8.2 percent, it’s down to 3.8 percent. It’s well within the two to four percent band. So it’s possible that you may have a rate cut this year and possibly more rates next year,” Recto said.

“Surely, I don’t expect interest rates to go any higher. If not, there is time, they will start to go down, maybe 150 basis points for the next two years,” he added.

During the Philippine Economic Briefing, Recto said he doesn’t expect interest rates to go higher.

Recently, the Bangko Sentral ng Pilipinas kept the overnight rate at 6.5 percent for the fifth straight policy meeting,

For her part, Bangko Sentral ng Pilipinas (BSP) Senior Assistant Governor Iluminada Sicat said they will be careful not to lower the interest rates too early.

“That is precisely the reason why the BSP must be very careful not to bring down the interest rate too early or else we may not be able to address some of the upside risks that we are seeing in the future,” Sicat said.

“Eventually, once all of these actions of the BSP, together with the non-monetary policy of the national government in addressing the supply side, we will be able to bring back inflation to the target range for 2024 and 2025,” she added. Jaspearl Tan/DMS