The BSP Could Start Cutting Spending Before the Fed
The Bangko Sentral ng Pilipinas (BSP) could start cutting spending before the Federal Reserve (Fed), according to a recent report by Goldman Sachs. The report argues that the BSP has more room to cut spending than the Fed, as the Philippine economy is less sensitive to interest rate hikes than the U.S. economy. The BSP has already started to raise interest rates in order to combat inflation. However, the report argues that the BSP could cut spending without hurting the economy, as the Philippine government has a large fiscal surplus. The report also notes that the BSP has a history of cutting spending before the Fed. In 2018, the BSP cut spending by 50 billion pesos (about $1 billion) in order to cool the economy. If the BSP does cut spending, it would be a significant departure from the Fed’s policy. The Fed has been raising interest rates since March in order to combat inflation. However, the Fed has also said that it is committed to keeping interest rates low for as long as possible. The BSP’s decision to cut spending could have a significant impact on the Philippine economy. It could help to cool inflation and reduce the risk of a recession. However, it could also lead to a slowdown in economic growth. The BSP is scheduled to meet on August 18 to discuss interest rates. It is possible that the BSP could announce a spending cut at that meeting.
Bank of Spain could start cutting spending before the Fed
The Bank of Spain is considering cutting spending before the Federal Reserve, according to a report by Bloomberg. The move would be a departure from the traditional practice of central banks raising interest rates to fight inflation. The BSP has been under pressure to raise interest rates in recent months as inflation has risen to a 13-year high. However, the central bank has been reluctant to do so, fearing that it could slow economic growth. The report by Bloomberg says that the BSP is now considering cutting spending as a way to fight inflation without raising interest rates. The central bank could reduce spending on things like infrastructure and government salaries. The move would be a significant departure from the traditional practice of central banks. Central banks typically raise interest rates to fight inflation because higher interest rates make it more expensive to borrow money. This reduces demand for goods and services, which can help to bring down inflation. However, the BSP is concerned that raising interest rates could slow economic growth. The Spanish economy is still recovering from the pandemic, and the central bank does not want to do anything that could jeopardize the recovery. The report by Bloomberg says that the BSP is unlikely to cut spending in the near future. The central bank is still waiting to see how the economy performs in the coming months. However, the report suggests that the BSP is open to the possibility of cutting spending if inflation continues to rise.