MANILA —The Philippine central bank cut its key interest rate PHCBIR=ECI by 25 basis points to 6.25% on Thursday, saying that inflation would fall back into its target range and it could loosen policy settings to support the economy.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said the balance of risks for the inflation outlook were tilted towards the downside for 2024 and 2025.
“With inflation on a target-consistent path, the current macroeconomic outlook supports a calibrated shift to a less restrictive monetary policy stance,” he said, but noted authorities were alert to lingering upside price risks.
It was the first time the central bank had cuts rates since November 2020, at the height of the COVID pandemic. The BSP had raised rates by a total of 450 basis points between May 2022 and Oct 2023 to restrain inflation.
Economists polled by Reuters were divided on what the BSP would decide, with 13 of 24 forecasting the key interest rate would be held steady at 6.50% and the other 11 expecting a 25 basis point cut.
The policy decision followed data last week showing the economy grew 6.3% in the second quarter from a year earlier, and that annual inflation had risen to 4.4% in July, above the central bank’s 2.0% to 4.0% target range for the year.
—Reporting by Mikhail Flores and Neil Jerome Morales; Editing by John Mair
