The Bangko Sentral ng Pilipinas (BSP) left its policy rate steady at 5.75 percent after the policy-making Monetary Board on Thursday decided that uncertainties brought by high tariffs on imports to the United States under the Trump administration remain.

Accordingly, the interest rates on the overnight deposit and lending facilities remain at 5.25 percent and 6.25 percent, respectively.

Economists had projected the BSP to cut its policy rate by 25 basis points.

BSP Governor Eli Remolona Jr. said the steady rate should drive higher economic growth through loan-based consumption of goods and services by households and businesses while keeping inflation rates manageable this year.

“When it comes to trade policies, the inflation impact has been higher since the 1960s,” he said.

Bloomberg reported global oil prices last Monday recently rose by at least 0.70 percent following Trump’s announcement of a 25 percent tariff on imported steel and aluminum.

“Something has changed and that is what’s going on globally. We have to figure out what the uncertainties will be and that is tricky to analyze,” Remolona said.

Recalibration necessary

“I think we need a little bit of time to recalibrate our models because we’re facing an unusual phenomenon,” he added.

Remolona said the average inflation this year might inch up to 3.5 percent from the 3.4 percent the BSP Monetary Board estimated in December. For 2026, it maintained the inflation outlook at 3.7 percent.

“The risks to the inflation outlook have become broadly balanced. Nonetheless, upside pressures are seen to come from the utilities sector,” he added.

However, Remolona said the lower tariff on imported rice should temper overall inflation.

The BSP aims to stabilize overall prices within 2 to 4 percent. Last month, inflation remained at 2.9 percent after accelerating from 1.9 percent in September 2024 based on data from the Philippine Statistics Authority.

BSP Deputy Governor of Monetary and Economics Francisco Dakila Jr. added minimum wage increases of up to 8.1 percent last year might push up inflation as they tend to have a delayed impact.

To help ensure higher economic growth of at least 6 percent, Remolona said the BSP is still considering easing its rate by a total of 50 basis points this year.

Aside from this, he said the BSP is eyeing reducing its reserve requirement ratio (RRR) for universal and commercial banks to 5 percent from 7 percent.

A lower RRR allows banks to lend more of their funds to clients.

Remolona said the RRR cut might come in the first half of the year.

“Inflation rates continued to be lower than the peaks we saw in the past quarters. Labor conditions also continue to be firm. These are enough signals that economic growth will continue,” BSP Assistant Governor of the Monetary Policy Sub-sector Zeno Abenoja added.

National statistics showed the average economic growth last year stood at 5.6 percent below the target range of 6 to 6.5 percent set by the Development Budget Coordination Committee.

The figure came after household consumption slowed to 4.7 percent in the fourth quarter from 5.2 percent in the third quarter amid the still elevated average inflation of 3.2 percent in 2024.

“Inflation will return to mid-point of the BSP target in 2026 due to decline in global oil prices,” Dakila said.