US-Philippines trade talks have concluded – but the result feels not just unbalanced, but geopolitically self-defeating. The BSP next meets on 28 August, and with inflation still falling, another rate cut looks likely.
Monetary Policy, Inflation & Interest RatesAs we expected, the Bangko Sentral ng Pilipinas (BSP) cut its policy rate to 5.25% in June. The next meeting is set for 28 August, and we anticipate another cut. That’s largely driven by BSP’s own inflation forecast – which has been revised down to just 1.6% for 2025. May’s CPI print came in at 1.3% – the lowest since November 2019.
TariffsOn 22 July, Washington and Manila struck a deal. But the terms have raised eyebrows. Philippine goods entering the US will face a 19% tariff – just 1% below the threatened 20%. Meanwhile, US goods entering the Philippines will be tariff-free.
The imbalance is glaring. The Philippines ran a USD4.9Bn trade surplus with the US in 2024 – far below Vietnam’s USD123.5Bn or Indonesia’s USD17.9Bn...
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