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Philippine central bank cuts rates amid easing price pressures

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Philippine central bank cuts rates amid easing price pressures

The Philippine central bank cut its key interest rates for the third time this year amid a "benign" inflation outlook.

Bangko Sentral ng Pilipinas, which cut rates in May and August, lowered the interest rate on its overnight reverse repurchase facility by 25 basis point to 4.0%. The interest rates on the overnight deposit and lending facilities were reduced accordingly to 3.5% and 4.5%, respectively.

The central bank said price pressures have eased further since last month while noting upside risks to its near-term inflation outlook due to oil price volatility and the impact of a pig disease on food prices.

Policy-setters expect global economic growth weakness to persist due to trade uncertainties. Domestically, the GDP growth rate reached a four-year low of 5.5% in the second quarter.

"Given these considerations, the Monetary Board believes that the benign inflation outlook provides room for a further reduction in the policy rate to support economic growth and reinforce market confidence," the central bank said in a statement.

Alex Holmes, emerging markets economist specializing in emerging Asia at Capital Economics, said in a note that today's rate cut may not be the last in the central bank's easing cycle.

"With growth likely to disappoint and price pressures set to remain subdued, we expect more cuts in the coming quarters," Holmes said.