- Central bank cuts key rate to 5.25%
- 2025 inflation forecast lowered to 1.6% from 2.4%
- Another 25 basis points cut possible, governor says
MANILA — The Philippine central bank delivered a widely expected second straight policy rate cut on Thursday and left the door open for at least one more trim this year to support economic growth, even as inflation risks required close monitoring it said.
Inflation slowed to 1.3% in May, the weakest pace in over five years and below the Bangko Sentral ng Pilipinas 2%-4% target range, while first-quarter growth missed expectations despite a surge in public spending.
The central bank lowered its key rate PHCBIR=ECI by 25 basis points to 5.25%, its lowest level in two-and-a-half years, and in line with a consensus forecast of 22 out of 25 economists polled by Reuters.
Governor Eli Remolona said the central bank could cut rates by another 25 basis points without giving a timeframe. There are three more policy meetings scheduled for this year.
“On balance, the Monetary Board sees the need for a more accommodative monetary policy stance,” Remolona told a press conference. “Emerging risks to inflation from rising geopolitical tensions and external policy uncertainty require close monitoring.”
The central bank lowered its inflation forecast for this year to 1.6% from 2.4%, but slightly raised its projection for 2026 to 3.4% from 3.3%, and for 2027 to 3.3% from 3.2%.
There were indications of a slowdown in the global economy, driven by uncertainty over U.S. trade policy and conflict in the Middle East, Remolona said.
“This would lead to slower growth in the Philippines,” the governor said, and balancing the need to address inflation while supporting growth had become increasingly difficult due to heightened uncertainties.
The BSP cut rates at three consecutive meetings from August last year, but then paused in its February review. It delivered another 25 basis points rate cut in April.
“If things remain on track, we’ll probably cut once more,” Remolona said.
—Reporting by Mikhail Flores and Karen Lema; Editing by John Mair and Rachna Uppal
