THE Philippine central bank may start slashing its policy interest rates by mid-year of next year in line with the movements of the US Federal Reserves (Fed), an official of Sun Life Asset Management Co. Inc. (Slamci) said.
Slamci Head of Equities and Global Market Funds Michael Adrian Vergara said the Bangko Sentral ng Pilipinas (BSP) would continue to track the actions of the Fed when it comes to cutting the country’s policy interest rates.
“It is really a matter of managing the peso… of managing liquidity within our market. So, if we think that the Fed would potentially cut—I think consensus is looking at maybe next year—I would expect the BSP to move around that fulcrum,” Vergara said in a news briefing on Tuesday during SLAMCI’s latest investment portfolio launch.
“They tend to move together. So, I would look at the middle of next year as the starting point or at least the basis for that,” he added.
Last month, the Monetary Board decided to again maintain its key policy rates, the third pause since May 2023, in the hopes that the third time could work as a charm for the economy and the inflation print.
The Monetary Board decided to keep the interest rate on the BSP’s overnight reverse repurchase facility at 6.25 percent. The interest rates on the overnight deposit and lending facilities were also retained at 5.75 percent and 6.75 percent, respectively.
In a related development, Slamci launched last Tuesday its “Prosperity World Income Fund” (WIF) that seeks to attract Filipinos in investing in a fund that it said has both income and growth potential.
Slamci Head of Strategic Development and Training Dino S. Macasaet said the WIF, a feeder fund, provides investors with a monthly cash income payouts in the short term while having a capital growth in the long term.
Macasaet noted that the WIF could have an annual dividend yield of 4.5 percent to 5.5 percent per annum.
Macasaet explained that 90 percent of the WIF would be invested in the BlackRock Dynamic High-Income Fund, which in turn would invest the money in cash and derivatives, equities, dividend-paying stocks, and high-yield bonds, among others.
Filipinos can invest in the WIF for as low as P10,000 with additional investments in the increment of P1,000.
“When markets are tough, regular payouts can help you get by while waiting for your principal [investment] to grow. Investing in income-paying funds allows you to receive dividends and at the same time there is a potential growth of your investment,” Macasaet said.
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