Philippines' central bank may cut overnight borrowing rate

But there's no pressure to enforce the 25bps slash soon.

According to DBS, it will be close, but the central bank (BSP) is likely to cut the overnight borrowing rate (OBR) by 25bps to 3.50% this week. The country is still enjoying the sweet spot of strong growth and low inflation.

Here's more from DBS:

With the latest headline inflation print of 3.6% YoY in September, there are no immediate risks of price pressures. For the rest of this year, inflation is likely to stay below 4%, implying that monetary policy can stay accommodative.

On the trade front, the 20% MoM drop in exports in August is disconcerting. To be sure, export numbers had been propped up by non-electronics manufactures.

However, this component suffered a 30% MoM decline in August, lead by a fall in machinery and transport equipment exports. Meanwhile, electronics exports continue to grind along sideways in value terms. A rate cut this week would be preemptive of further weakness in the export sector in the coming months.