BNY expects Bangko Sentral ng Pilipinas to cut its policy rate by 25 basis points to 4.25% on 19 February, extending its easing cycle. It says growth risks are the main driver of the move.<\/p>\n
Inflation is described as manageable within the medium-term target, and it is not expected to fall quickly. BNY points to downside risks to economic growth versus near-term upside risks to inflation.<\/p>\n
The bank sees the chance of at least one further rate cut in Q2 2026. It links this to domestic political uncertainty and limited clarity on when growth will rebound.<\/p>\n
It also notes that the Philippine peso has a cyclical balance-of-payments profile. This increases the need for rate support and for an adequate real rate buffer to help stabilise emerging-market foreign exchange.<\/p>\n
With the central bank poised to cut its key rate by 25 basis points to 4.25% this Thursday, we see a clear signal. This move is driven by a focus on boosting economic growth over worries about inflation. For derivative traders, this outlook suggests a weakening of the Philippine Peso against the US dollar.<\/p>\n
Recent statistics support this view, as we saw January’s inflation print come in at 3.1%, comfortably inside the central bank’s target range. This came after Gross Domestic Product for the final quarter of 2025 registered a disappointing 5.2%, signaling a slowdown that justifies monetary easing. We recall that throughout much of 2025, the peso struggled due to a widening trade deficit, making it sensitive to any loss of yield advantage.<\/p>\n
This environment makes buying US dollar calls against the peso an attractive strategy. These options provide the right to buy dollars at a set price, profiting if the peso weakens as expected following the rate decision. Traders might also consider selling peso forward contracts to lock in a favorable exchange rate for the coming months.<\/p>\n
Looking beyond this week, the prospect of at least one more rate reduction in the second quarter suggests this downward trend for the peso could continue. This potential for further easing creates ongoing volatility, which could be captured by structuring longer-dated options that expire after the second quarter. Maintaining an adequate interest rate difference remains crucial for the peso, and this cycle of cuts continues to erode that support.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" BNY expects BSP to cut 25bp to 4.25% Feb 19, citing growth risks, peso support.<\/p>\n","protected":false},"author":62,"featured_media":17024,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42023","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t