MANILA -- Virus-stricken China poses a drag on the global economy, giving the world's central banks, including the Philippines, room to cut interest rates earlier than expected, ING Bank said Friday.
World commodity prices will remain "depressed" due to weak demand from China, where millions are on lockdown and with many countries closing their borders to those from the mainland, said ING Bank analyst Nicholas Antonio Mapa.
With Thailand cutting rates and the US Federal Reserve likely to cut this year due to the coronavirus outbreak, Mapa said investors seeking higher yields are unlikely to leave the Philippines.
"If everyone's cutting, there's no change in the relative field," Mapa told ANC's Market Edge. "Everybody's alternatives are few and far between."
Bangko Sentral ng Pilipinas Governor Benjamin Diokno fired the first half of his planned 50-basis point cut in the overnight borrowing rate last Thursday, calling it a "preemptive" move.
Diokno said first half economic growth could be reduced by 0.3 point because of the virus. Mapa said he could lower his forecast for full year growth to 6.4 percent from 6.5 percent.
The BSP governor is "very clear where he wants to be," Mapa said. "Transparency and good communications from the BSP will go a long way in maintaining financial market calm."