Daily Tribune‘Going forward, the BSP will safeguard price stability by ensuring monetary policy settings are conducive to sustainable economic growth and employment.’
Bangko Sentral ng Pilipinas officials, headed by its governor, Eli Remolona (center), preside over the Monetary Board meeting on Thursday in Pasay City.
Photograph courtesy of BSP/FB
The ruling Monetary Board of the Bangko Sentral ng Pilipinas, following a policy meeting on Thursday, eased its Target Reverse Repurchase (RRP) Rate by 25 basis points to 5.0 percent, the lowest in nearly three years or since September 2022.
In a statement, the BSP said the interest rates on the overnight deposit and lending facilities were adjusted to 4.5 percent and 5.5 percent, respectively.
Rizal Commercial Banking Corporation chief economist Michael Ricafort said the widely expected BSP rate cut could further reduce borrowing costs/funding costs by listed companies, consumers, institutions and other borrowers in the economy.
“This thereby could lead to greater demand for loans that, in turn, could lead to more investments and faster overall economic/GDP growth; and could signal that faster economic growth is the policy priority to better deal with external risk factors recently such as US President Donald Trump’s higher tariffs and protectionist policies, the persisting tensions in the Middle East, among other geopolitical factors that, in turn, could indirectly slow down local economic growth,” Ricafort explained.
Inflation outlook
Meanwhile, the BSP said the inflation outlook is broadly unchanged, forecasting that inflation for 2025 could settle at 1.7 percent.
“The forecasts stand at 3.3 percent for 2026 and at 3.4 percent for 2027. Inflation expectations also remain well-anchored. Meanwhile, possible electricity rate adjustments and higher rice tariffs could raise inflationary pressures over the policy horizon,” according to the BSP.
Moreover, the Monetary Board said it observed that domestic demand has held firm.
However, the impact of US policies on global trade and investment continue to weigh on global economic activity, which could temper the outlook for the Philippine economy.
“Emerging risks will continue to require close monitoring. The Monetary Board will determine the monetary policy response based on the evolving outlook for inflation and growth. Going forward, the BSP will safeguard price stability by ensuring monetary policy settings are conducive to sustainable economic growth and employment,” the BSP stressed.
