MANILA, Aug. 8 (Xinhua) -- The Bangko Sentral ng Pilipinas (BSP), or the central bank of the Philippines, decided on Thursday to cut the key interest rates by 25 basis points to 4.25 percent after the government reported that the second-quarter economic growth was the slowest in four years.
The announcement came hours after the Philippine Statistics Authority (PSA) reported the Philippines' gross domestic product (GDP) grew at a slower pace of 5.5 percent in the second quarter of 2019, the slowest growth in 17 quarters.
The BSP said the decision was based on its assessment that price pressures have continued to ease since the previous meeting.
It said inflation expectations has also moderated further to levels consistent with the inflation target based on the BSP's survey of private-sector economists.
Moreover, it said the risks to the inflation outlook continue to be seen as broadly balanced for 2019 and 2020, while they are seen to tilt to the downside for 2021.
"Weaker global economic prospects continue to temper the inflation outlook. The potential adverse effects of a prolonged El Nino episode to inflation have subsided," the BSP said.
The prospects for global economic activity are likely to remain weak amid sustained trade tensions among major economies, the BSP said.
Therefore, the central bank believes that the benign inflation outlook provides room for a further reduction in the policy rate and it is also "a pre-emptive move" against the weakening global growth risks which may affect the Philippine economy.
This is the second monetary easing unleashed by the Philippine central bank this year after rates were reduced by 25 basis points back in May.