Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. met with President Ferdinand R. Marcos Jr. at Malacañang Palace on Tuesday, 21 January 2026, to discuss the central bank’s recent interest rate cuts and the country’s broader macroeconomic outlook for 2026.
The pair previously met at the Palace on 26 November, where they acknowledged the sluggish performance this year, highlighted by the sharp slowdown in third-quarter Gross Domestic Product (GDP) growth to 4.0 percent — the weakest in nearly two years brought about by the contraction in public infrastructure spending in the fallout of the flood control scandal.
Their previous meeting saw both retain optimism for a recovery beginning this year and a return to the government’s growth target range by 2027.
Two weeks after their November summit, the BSP’s Monetary Board (MB)—the central bank’s highest policymaking body—decided to cut the target reverse repurchase (RRP) rate at its 11 December 2025 meeting, lowering it from 4.75 percent to 4.50 percent.
The MB also reduced interest rates on overnight deposit facilities from 4.25 percent to 4.00 percent, and on overnight lending facilities from 5.25 percent to 5.00 percent. The Board is scheduled to reconvene on 19 February, with several institutions and economists expressing optimism about the possibility of another RRP cut.
While the BSP has previously signaled that its easing cycle may be nearing an end, Remolona has recently adopted a more dovish tone. He said another RRP cut at the upcoming February meeting remains “on the table,” although he later qualified that such a move is “unlikely.”
The RRP serves as the BSP’s primary policy tool for managing interest rates and liquidity in the financial system. Banks with excess funds may place them with the BSP through the RRP facility, earning interest at the prevailing rate, which also acts as the country’s benchmark policy rate.
By adjusting the RRP, the BSP influences borrowing costs, liquidity conditions, and overall economic activity. Lower interest rates encourage investment and consumer spending—critical drivers of growth in an economy heavily reliant on consumption, which accounted for about 76.15 percent of gross domestic product (GDP) in 2024, according to the World Bank.
With headline inflation averaging 1.7 percent, well below the BSP’s 2 to 4 percent target range, the central bank retains room to ease policy further to stimulate economic activity that has been dampened by the fallout from the corruption scandal linked to anomalous flood control projects.
Remolona has previously said that 2025 GDP growth is expected to average 4.6 percent, significantly below the government’s 5.5 to 6.5 percent target. He attributed the slowdown largely to weakened market and investor confidence in the wake of the floodgate scandal.
Analysts from Metropolitan Bank & Trust Company (Metrobank) and Malayan Banking Berhad (Maybank) both expect the BSP to gradually cut the RRP toward a terminal rate of 4.00 percent by end-2026, the lowest since August 2022. Maybank added that it expects two rate cuts in each half of 2026.
On the other hand, Bank of the Philippine Islands (BPI) Lead Economist Jun Neri expects two additional to occur in the first half alone.
“We see the scope for additional rate cuts from the BSP in the coming months given the favorable inflation outlook, with two cuts in the first half of 2026,” he said.