THE PESO could slide to the P59-per-dollar level anew this week amid signals of fewer rate cuts from both the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.

The peso closed at P58.81 versus the dollar on Friday, strengthening by 19 centavos from its record-low P59 finish on Thursday, according to Bankers Association of the Philippines data posted on its website.

Week on week, however, the peso weakened by 34 centavos from its P58.47-per-dollar close on Dec. 13.

The peso depreciated against the dollar on Friday as the BSP signaled less rate cuts in the year ahead due to inflation risks, a trader said by phone.

“The US dollar-peso exchange rate corrected lower after the latest signals from BSP governor about being open to another rate cut in its first rate-setting meeting in 2025, as rates are still somewhat restrictive, considered an insurance amid risks that inflation might rise again,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., likewise said in a Viber message.

The Monetary Board on Thursday delivered a third straight rate cut, slashing its policy rate by 25 basis points (bps) to 5.75% from 6%.

The central bank has now reduced benchmark borrowing costs by a total of 75 bps this year since it began its easing cycle in August.

BSP Governor Eli M. Remolona, Jr. said delivering 100 bps worth of cuts next year may be “too much.”

He earlier said they could reduce rates by around 100 bps in 2025, though not necessarily at every meeting or every quarter.

“Even with the 75 bps, from all our estimates, we’re still somewhat on the tight side. That for us is a kind of insurance. The reason we’re cutting in baby steps is because we’re not absolutely sure about inflation,” Mr. Remolona said on Thursday.

“We still worry that inflation might start to rise again. By cutting in baby steps, at this point, we’re still somewhat tight. That’s kind of insurance against a possible increase in inflation.”

On Friday, he said the BSP is open to delivering another rate cut in its first monetary policy meeting next year.

For this week, the trader said the peso could continue to weaken and even retest its all-time low amid hawkish guidance from both the BSP and US Federal Reserve.

The US central bank cut interest rates on Wednesday, as expected, but Federal Reserve Chair Jerome H. Powell said more reductions in borrowing costs now hinge on further progress in lowering stubbornly high inflation, remarks that showed policy makers are starting to reckon with the prospects for sweeping economic changes under a Trump administration, Reuters reported.

“I think we’re in a good place, but I think from here it’s a new phase and we’re going to be cautious about further cuts,” Mr. Powell said at a press conference after the central bank’s policy-setting Federal Open Market Committee cut its benchmark interest rate by a quarter of a percentage point at the end of a two-day meeting.

While he said the Fed remained confident price pressures would continue to ease, he also acknowledged central bank staff and policy makers were beginning to at least preliminarily think through how President-elect Donald J. Trump’s promises of higher tariffs, tax cuts and tougher immigration policy will change the outlook.

The Fed, which hiked rates aggressively in 2022 and 2023 to combat a surge in inflation, began its easing cycle in September with a half-percentage-point cut in borrowing costs, and followed up with a quarter-percentage-point cut last month.

Rates will fall again once inflation shows it is making more progress, “with the extent and timing of additional adjustments to the target range” depending on “incoming data, the evolving outlook, and the balance of risks,” the Fed said in new language that sets up a likely pause to the rate cuts beginning at the Jan. 28-29 meeting.

US central bankers now project they will make just two quarter-percentage-point rate reductions by the end of 2025.

That is half a percentage point less in policy easing next year than officials anticipated as of September, with Fed projections of inflation for the first year of the new Trump administration jumping from 2.1% in their prior projections to 2.5% in the current ones.

Still, the peso could be supported by the seasonal increase in overseas Filipino workers’ remittances “amid the Christmas shopping rush that could culminate with a week before Christmas,” Mr. Ricafort said.

The trader expects the peso to move from P58.50 to P59 against the dollar this week, while Mr. Ricafort sees it ranging between P58.60 and P59. — Luisa Maria Jacinta C. Jocson with Reuters