BSP cuts rates for 6th straight meeting

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) on Thursday decided to continue with its policy easing cycle, as the body cut key policy rates by 25 basis points for the sixth straight meeting to the lowest level seen in over three years.

According to BSP governor Eli Remolona Jr., the Monetary Board decided to cut rates to bring the target reverse repurchase rate to 4.25%, the overnight deposit rate to 3.75%, and the overnight lending rate to 4.75%.

This is the lowest since August 2022, when the overnight reverse repurchase facility rate was set at 3.75%.

“The outlook for inflation remains manageable. However, forecasts have risen slightly for 2026 due mainly to supply-side pressures, which are likely to be temporary,” BSP governor Eli Remolona Jr. said in a briefing in Manila.

“Nevertheless, inflation expectations remain firmly anchored, and inflation is seen to return close to the 3% target by 2027,” he added.

Thursday’s cut comes as the central bank looks to support economic growth, dampened by the loss of confidence due to ongoing corruption issues plaguing the administration, particularly on flood control projects.

“Growth has been softer than expected. Investment slowed. We attribute this to a lack of confidence but some data on sentiment show tentative signs of recovery,” Remolona said.

“Our decision today may actually help to restore confidence, boosting investment and consumption. The pace of economic recovery will depend on how quickly confidence returns,” he added.

The economy grew by 3.0% in the fourth quarter of 2025, bringing the full-year growth rate to 4.4%, below the government’s target range for the third straight year, largely due to the lack of confidence as both public and consumer spending declined.

This came as Philippine lawmakers look into alleged irregularities in public works spending, after President Ferdinand “Bongbong” Marcos Jr. last August disclosed that 20% of the total P545-billion budget for flood control projects went to only 15 contractors, which he described as a “disturbing assessment.”

This has hit government spending on public works and dampened consumer and investor sentiment, leading Department of Economy, Planning, and Development (DepDev) Secretary Arsenio Balisacan to concede that the country is unlikely to achieve its economic growth target for the third straight year in 2025.

“We’re now in a situation where it’s more conditional on what happens to confidence and growth because in December, we were more confident that confidence would return pretty soon. The lack of confidence actually turned out to be bigger than we thought,” Remolona said.

“If the confidence will return pretty soon in a few months, if we’re right, we don’t need further cuts,” he added.

The central bank expects economic growth to average 4.6% this year, below the Development Budget and Coordination Committee’s (DBCC) target range of 5.0% to 6.0%, and at 5.9% in 2027, also below the 6.0% to 8.0% target range.

In terms of inflation, the BSP said it expects this to average 3.6% this year, higher than the 3.2% outlook made in December, largely due to the impact of higher prices of electricity, the flexible rice tariff mechanism, and oil prices.

This is then expected to decelerate to 3.2%, still within the BSP’s target range of 2.0% to 4.0%.

“We support growth, we do want to increase the growth, but at the same time, our main mandate is inflation. To the extent we can support growth without causing inflation, we will support growth,” Remolona said. – JMA/AOL, GMA Integrated News