Research firm BMI expects the Bangko Sentral ng Pilipinas (BSP) to deliver another interest rate cut before the end of the year, citing a softer inflation outlook and moderating domestic demand.

The forecast follows the BSP’s 25-basis-point (bps) rate reduction on Oct. 9, which brought the reverse repurchase rate down to 4.75 percent. Since 2024, the central bank has slashed rates by a total of 175 bps (or 1.75 percentage points) to help stimulate lending and business activity.

“We maintain our forecast of 50 bps in cuts in 2026 with inflation remaining soft,” BMI said in a recent report.

BMI said the BSP’s more “dovish” tone signals room for a looser monetary stance, citing Governor Eli Remolona Jr., who remarked that the central bank now has “scope for a more accommodative monetary policy stance” amid “favorable inflation outlook and moderating domestic demand.”

“As such, we now expect BSP to cut by 25bps at its final meeting in 2025 in December to 4.50 percent and by another 50 bps in 2026,” the firm added.

The country’s inflation rate slightly rose to 1.7 percent in September from 1.5 percent in August, largely due to weather-related disruptions in food supply. However, average inflation for the first nine months of 2025 remained at 1.7 percent, still below the BSP’s 2–4 percent target range.

BMI projects Philippine GDP growth at 5.4 percent this year, slower than the government’s 5.5 to 6.5 percent target. The report also cited risks from weakened investor sentiment linked to flood control project probes, a decline in the Philippine Stock Exchange index, and slowing exports. Merchandise exports rose 4.6 percent year-on-year in August, down sharply from 17.6 percent in July, partly due to the impact of US tariff adjustments.

Lower interest rates are generally intended to reduce borrowing costs, encourage credit activity, and support consumer and business spending—key drivers for economic recovery and private sector investment.

BMI is the research and analysis arm of Fitch Solutions, a London-based global provider of economic intelligence and industry insights. It offers countries risk forecasts and sector analyses to guide investors, corporations, and policymakers in emerging markets such as the Philippines.