Singapore’s DBS Bank says Bangko Sentral may lower interest rates

Continuing slowdown of the global economy may compel the Bangko Sentral ng Pilipinas to lower still its policy rates before the year ends, Singapore-based DBS Bank said Monday.   The unfavorable performance of the global economy – dragged by problematic advanced economies – may convince the Bangko Sentral of the need for another rate cut, the financial service company said in a research note on the Philippines.   “The global outlook remains challenging amid a slowdown in the major economies and external demand will continue to drag,” DBS noted.   Bangko Sentral currently maintains its overnight borrowing rate at a record low of 3.5 percent. It lends overnight money at 5.75 percent.   The rates were the results of three rate adjustments of 25 basis points each so far this year.   The Philippine may need another rate-lowering exercise to cushion the impact a shrinking global economy, considering the economic and financial crisis in the US and Europe remains unresolved.   The exercise would not pose a threat to Philippine inflation, according to the bank, saying it expects inflation settle at 3.3 percent on average this year.   Philippine authorities kept the inflation target at 3 to 5 percent this year and. Inflation in the eight months to August registered at 3.2 percent on average. — VS, GMA News