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The Philippine central bank (BSP) is widely anticipated to deliver a third consecutive 25 bps rate cut to 5% today. BSP Governor Eli Remolona said an August cut was “quite likely” following the decline in CPI inflation to 0.9% YoY in July. With inflation below the official 2-4% target range, and fiscal flexibility limited after the mid-term elections, monetary policy is assuming a larger role in cushioning the economy from external uncertainties, such as the 19% US reciprocal tariff rate on Philippine goods. Hence, many expect BSP to provide guidance for another cut after this meeting.
Today’s decision will unlikely weigh on the PHP, which has appreciated in August to ~57 per USD from the year’s weakest levels around 58.50. USD/PHP has been taking its cue more from the US Federal Reserve, which has signalled a rate cut in September to cushion the labour market.
The South Korean central bank (BOK) left its base rate unchanged at 2.50% for a third consecutive time. Although inflation has been stable around the official 2% target, today’s hold decision was more about maintaining financial stability. The BOK is cautious about a buoyant property market adding to the already high household debt. BOK also revised up 2025 forecast to 0.9% from 0.8% for GDP growth, and to 2% from 1.9% for CPI inflation. Real GDP growth had rebounded by 0.6% QoQ sa in 2Q25 after a 0.2% contraction in the previous quarter, posting its strongest growth since 1Q24. The KOSPI stock market has risen more than 30% YTD this year, thrice as much as the S&P 500 Index.
USD/KRW has been taking its cue from the DXY Index after Liberation Day – the day US President Trump announced US reciprocal tariffs on the world. The KRW’s appreciation in 2Q25 also stalled and corrected over the past couple of months, following the KOSPI’s rally into a consolidation. Hence, USD/KRW may revisit the year’s low around 1360 again if next month’s FOMC meeting and the coming US-China trade talks improve global risk appetite amid USD weakness again.
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Martin Luther King Jr.
August 28 in history
Martin Luther King Jr. delivered his "I Have a Dream" speech during the March on Washington in 1963.
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