Further monetary policy easing seen in April

MANILA, Philippines — An interest rate cut in April remains possible, Metropolitan Bank & Trust Co. said, though it warned that rising rent and utility costs could limit the local central bank’s room to act.

In a commentary, the Ty-led bank said there was still a chance that the Bangko Sentral ng Pilipinas (BSP) would continue easing policy rates after a projected quarter-point reduction today at the Monetary Board’s meeting.

But it cautioned that mounting price pressures could gradually narrow the window for further support to the economy.

READ: Bangko Sentral seen to cut interest rate by 25 basis points on Feb. 19

“Further easing in April may remain in the cards if inflation remains subdued,” the bank said.

“However, faster inflation from higher rental and utility prices could eat away at any space the BSP has left, potentially closing the door on further reductions to the policy rate,” it added.

All 13 economists polled by the Inquirer last week penciled in a 0.25 percentage point rate cut for the Feb. 19 BSP meeting, citing the need to bolster domestic growth momentum following disruptions linked to an expansive anticorruption crackdown.

If realized, the reduction would bring the overnight borrowing rate to 4.25 percent and the cumulative cuts since the easing cycle began in August 2024 to 2.25 percentage points.

The assessment followed data showing that gross domestic product had expanded by just 3 percent in the fourth quarter of 2025—the slowest pace in more than 14 years outside the pandemic—and well below market estimates. The weak outturn dragged the average growth in 2025 to 4.4 percent, missing the government’s 5.5-percent to 6.5-percent target.

Back within target range

Meanwhile, consumer prices rose 2 percent in January from a year earlier, ending 10 consecutive months of readings below the central bank’s 2-percent to 4-percent target range. The uptrend was largely driven by a faster increase in the costs of rent and utility bills, figures showed.

READ: Marcos, BSP governor tackle reduced interest rates, economic outlook

BSP Governor Eli Remolona Jr. has said he would only worry about headline inflation if it settles above 3 percent. He also said that any future actions of the central bank would remain data-dependent.

Throughout the ongoing campaign to support growth, the Monetary Board paused only once, holding rates steady at its Feb. 13 meeting last year.

“Faster price growth in 2026 will be driven by a low base from last year, which may be offset by the resumption of rice imports,” Metrobank said. “As such, inflation will remain firmly within the central bank’s target, leaving space to cut policy rates.” INQ