Bangko Sentral ng Pilipinas (BSP) Governor and Monetary Board Chairman Eli Remolona Jr. on Tuesday said a policy rate cut next month is being considered.
“A cut in April is on the table,” he said in a meeting with the media at Shangri-La Hotel in Mandaluyong City.
Currently, the BSP policy rate stands at 5.75 percent. The Monetary Board is expected to announce its move on the policy rate on 10 April.
A few more cuts
Remolona said the Monetary Board is studying a “few more cuts” this year, which he stressed should help the economy expand as banks impose lower interest rates to encourage loan-based purchases by households and firms.
“We see that we’re still on the easing cycle this year,” the BSP chief said.
Remolona said the slower-than-expected inflation last month of 2.1 percent from 2.9 percent in January signals future manageable inflation rates or within 2 to 4 percent in the near term.
However, he said the Monetary Board remains vigilant with its policy rate adjustments due to global uncertainties stemming from Trump’s economic policies.
Trump’s high tariffs on imports
Economists said US President Donald Trump’s high tariffs on US imports, especially those from Canada, Mexico and China, could boost global inflation as supplies of goods become limited.
Given the inflationary risk, the Monetary Board decided to maintain the policy rate at 5.75 percent last month after reducing it by a total of 75 basis points in 2024.
Recalibrate BSP’s monetary policy model
Remolona said the BSP has yet to recalibrate its model for monetary policy to take account of the uncertainties.
He said that worries about the global economy were echoed by 59 other central bank governors in a meeting organized by the Bank for International Settlements.
“So far our measures of policy uncertainty have spiked, but the market measures of uncertainty have not spiked. We’re all trying to figure out what to do,” Remolona said.
The BSP chief said the Monetary Board will be looking at several economic factors, including the peso-US dollar exchange rate, to ensure its policy rate spurs economic growth while keeping the inflation low.
Baby steps
“When we think we’re on track, we stay with baby steps which means 25 basis points at a time. If things look much worse than we thought, a bigger cut of 50 bps or higher is possible,” Remolona said.
In its monetary policy meeting last month, the Monetary Board raised its average inflation outlook for this year to 3.5 percent from the 3.4 percent estimate it announced in December 2024.
For 2026, the Board maintained its projection of 3.7 percent.
