Inflation in the Philippines eased in June to 2.8% from 2.9% in May, providing the central bank a wider scope to tweak monetary policy if needed by the economy. Average inflation in 1H is at 3.0% for headline inflation and 3.5% for core inflation, both at the lower end of the central bank's 3%-5% target range for 2012. Emilio Neri, an economist at Bank of the Philippine Islands, says comments of the central bank harping on uncertainty in the global economic outlook suggest a rate cut may be on the cards after the recent pause in rate cuts. "Monetary authorities are also concerned that low inflation means they are sacrificing economic growth, and they could deliver another rate cut within the year," says Neri. Overnight rates, after two 25 bps cuts earlier this year, stand at 4.0% for borrowing and 6.0% for lending.
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