The Bangko Sentral ng Pilipinas (BSP) is likely to pursue cautious easing given the inflationary impact of US President-elect Donald Trump’s proposed tariffs.

“We expect the BSP to continue to ease policy for the foreseeable future, given that the current stance remains very tight in real terms,” ​​Pantheon Macroeconomics said in a report.

“However, we have reduced our expectations for the aggressiveness of this easing cycle, as the Fed (US central bank) will likely no longer be as hawkish given the inflationary impact of President-elect Donald Trump’s proposed tariffs,” it added.

Trump has said the US would impose tariffs of at least 10 percent on all imports and 60 percent on Chinese-made goods if re-elected.

Economists have warned that this could pose a risk to inflation and cause monetary authorities to reconsider further cuts in policy rates.

The BSP’s policy rate currently stands at 6.0 percent after two 25 basis point (bps) cuts in August and October. It is expected to follow this up with another 25 basis point cut next month.

With Trump having won enough Electoral College votes to secure the presidency, Socioeconomic Planning Secretary Arsenio Balisacan said Thursday that diversification is needed to insulate the local economy from protectionist politics.

With the United States the largest buyer of Philippine exports, he said trade agreements with other countries should be pursued.

Worries about the Philippine peso, which has weakened as the dollar rose ahead of Trump’s win, have also raised concerns about the timing of the BSP’s easing. Some economists have said a break could come in December.

The peso, which in September rose to the P55:$1 level, has fallen to $58:$1 territory. It closed 47 centavos stronger on Friday, ending the week at P58.26 to the dollar.

At the same time, other analysts have said that new interest rate cuts were needed as economic growth slowed sharply to 5.2 percent in the third quarter from 6.4 percent three months earlier.

This has increased the likelihood that this year’s growth target of 6.0 to 7.0 percent will be missed.

Pantheon Macroeconomics cut its rate cut outlook to 25 basis points for December, down from 50 basis points previously, and also lowered its estimate for 2025 to 100 basis points from 150 basis points.