BSP continues policy easing, says more rate cuts possible

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) decided Thursday to continue with policy easing, and hinted at at least one more 25-basis-point rate cut this year given the moderate inflation outlook given the slowdown in the increase of food prices and the deceleration of economic growth.

In a briefing following its policy meeting, BSP Governor Eli Remolona Jr. said the Monetary Board cut key policy rates by 25 basis points, bringing the target reverse repurchase rate to 5.25%, the overnight deposit rate to 4.75%, and the overnight lending facility rate to 5.75%.

The latest cut is in line with market expectations, as inflation is now seen to average 1.6% this year, slower than the 2.3% projection made during the Monetary Board’s meeting in April.

The Monetary Board took into consideration the slowdown in food inflation, with the food and non-alcoholic beverages posting a 0.9% inflation in May, along with the relatively lower oil prices.

“The Monetary Board also noted indications of a deceleration in global economic activity, driven primarily by uncertainty over US trade policy and the conflict in the Middle East. This would lead to slower growth in the Philippines. A rise in oil prices, electricity rate adjustments, and higher rice tariffs, would add to inflationary pressures,” Remolona said.

The inflation forecast for 2026 was adjusted upward to 3.4% from 3.3% previously, and for 2027 to 3.3% from 3.2%.

“On balance, the Monetary Board sees the need for a more accommodative monetary policy stance. Emerging risks to inflation from rising geopolitical tensions and external policy uncertainty require closer monitoring,” Remolona said.

“If things remain on track, then we will probably cut once more, but depending on the data… But for now things remain on track. Isa pa (One more),” he added.

The Monetary Board is scheduled to meet three more times this year to discuss policy rates — August 28, October 9, and December 11.

“Going forward, the BSP will safeguard price stability by ensuring monetary policy settings are conducive to sustainable economic growth and employment,” Remolona said. — RSJ, GMA Integrated News