BSP lines up 2 more rate cuts in 2025
Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. (Photo by Ian Nicolas P. Cigaral)
MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) might reduce its benchmark interest rate twice more in the remainder of this year, BSP Governor Eli Remolona Jr. said on Thursday.
“There’s room [for more cuts] because inflation is low and [economic] growth is a bit lower also,” Remolona told reporters.
He spoke to journalists at the BSP headquarters in Manila. He did so on the sidelines of the opening of an exhibit that celebrates the central bank’s 32nd founding anniversary.
READ: BSP rate cuts in June and August likely on the table, says Deutsche Bank
Still, the BSP chief said “the [interest rate] cuts cannot really compensate entirely for the slowdown in growth.”
Last June 26, the interagency Development Budget Coordination Committee (DBCC) said it lowered the growth target range for 2025 to between 5.5 and 6.5 percent.
Before this, the Marcos administration was striving for this year’s gross domestic product to increase by 6 percent to 8 percent.
The DBCC said the revision took into account heightened global uncertainties. These include the unforeseen escalation of tensions in the Middle East and the imposition of US tariffs.
Still, Malacañang’s economic team said the Philippines’ international reserves remained ample, providing an adequate buffer to help absorb these external shocks.
“The Philippines remains one of the fastest-growing economies in [Southeast Asia], with robust domestic demand as its main driver,” the DBCC said.
“At the same time, the favorable inflation outlook has allowed the Bangko Sentral ng Pilipinas room to continue easing its monetary policy,” it added. “This is expected to improve credit conditions and support sustained consumption and domestic activity.”
Policy meetings
Last June 19, in their latest policy meeting, the BSP’s Monetary Board again reduced the target reverse repurchase rate by 25 basis points to 5.25 percent.
On Thursday, when Remolona was asked whether there might be further reductions, he said : “Absolutely. Two cuts? That’s possible.”
He noted that there are three more policy meetings scheduled this year—in August, October and December.
“The slowdown in growth is due to uncertainty,” Remolona said. “The purchase of big-ticket items are postponed as are investments. Meanwhile, exports also slow down because global growth is also slowing down.”
He added that the BSP is still evaluating whether or not to keep its target inflation at the range of 2 percent to 4 percent.
The Philippine Statistics Authority is scheduled to announce today, July 4, the inflation data for June.
Last May, inflation was pegged at 1.3 percent, further easing from 1.4 percent in April.
This was thanks mainly to slower price increase for nonfood items, such as electricity and refined petroleum products.
