BSP resumes policy easing, says more cuts ‘definitely’ coming

The Bangko Sentral ng Pilipinas (BSP) decided Thursday to continue policy easing and signaled additional cuts this year as inflation forecast risks have decreased and uncertainties have eased after US President Donald Trump paused tariffs on most countries.

According to BSP Governor Eli Remolona Jr., the Monetary Board reduced the target reverse repurchase rate to 5.5%, the overnight deposit rate to 5.00%, and the overnight lending facility rate to 6.00%.

This comes as the central bank now expects inflation to average 2.3% this year, slower than its previous forecast of 3.5%. This is expected to accelerate to 3.3% in 2026, before easing to 3.2% in 2027.

“The risks to the inflation outlook have also eased and continue to be broadly balanced from 2025 to 2027,” Remolona told reporters in a briefing at the central bank headquarters in Manila.

“Upside pressures come from possible increases in transport charges, meat prices, and utility rates. Meanwhile, downside risks are linked to the continuing effects of lower tariffs on rice imports and the expected impact of weaker global demand,” he added.

The cuts come after the Monetary Board in its February meeting decided to keep rates unchanged, as it said it was prudent to await further assessments of the impact of global policy uncertainty and the potential effects of the actual policies.

The United States last week announced its “Liberation Day” policy to slap a 17% reciprocal tariff on Philippine goods, which compares with the 34% rate that Manila charges against American goods. This was set to take effect on April 9, but Trump on Thursday announced a pause on most countries, admitting that it made markets nervous.

“There’s still some uncertainty, but there’s less of it than before," Remolona said about Trump's latest announcement.

“Like the rest of the world, we’re looking at slower growth, but unlike the rest of the world, we’re also looking at slower inflation. The rest of the world is looking at faster inflation. The slower rates we’re looking at give us more degrees of freedom,” he added.

“We contemplate further cuts this year. We can’t tell you exactly how many more cuts, but definitely further cuts this year. We’ll still do baby steps—25 basis points at a time, but I can’t tell you how many more times.''

The Monetary Board has four more scheduled meetings this year: June 19, August 28, October 9, and December 11.

“We think we will have completed the easing cycle in 2025,” Remolona said.

The BSP reduced rates by a total of 75 basis points in 2024—25 basis points each in August, October, and December. — VBL, GMA Integrated News