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The facade of Bangko Sentral ng Pilipinas
The STAR / File photo
MANILA, Philippines — The Bangko Sentral ng Pilipinas has cut its key interest rates by another 25 basis points, further easing its monetary policy stance as inflation continues to cool.
BSP Governor Eli Remolona announced Thursday, June 19, that the central bank’s policy rate has been reduced to 5.25% from 5.50% — its second consecutive cut this year following the April adjustment.
This brings the total rate reductions to 125 basis points since August 2024.
Following the adjustment, the overnight deposit and lending facility rates have been revised to 4.75% and 5.75%, respectively.
Future cuts. With two monetary policy meetings left this year, Remolona said the decision to implement further cuts or maintain current levels will be data-dependent.
“If things remain on track, we'll probably cut once more. Depending on the data, we may cut twice more. Depending on the data, we may not cut at all,” Remolona said in a press conference.
Inflation forecast falls, but risks remain. In a separate statement, the BSP said the Monetary Board’s decision was driven by a “moderated outlook” for inflation. The central bank’s 2025 inflation forecast was sharply lowered from 2.4% to 1.6%.
Forecasts for 2026 and 2027, however, were raised slightly to 3.4% and 3.3%, respectively. Despite this, the BSP said inflation expectations remain “well anchored.”
The BSP acknowledged potential headwinds from the global economy, including slowing global activity due to U.S. trade policy uncertainty and conflict in the Middle East, which could affect growth in the Philippines.
Domestically, the central bank flagged upward pressure on prices from rising oil costs, electricity rate adjustments, and higher rice tariffs.
Despite these inflationary risks, the Monetary Board said there is room for a more accommodative policy stance, citing the need to support growth and employment.
“Emerging risks to inflation from rising geopolitical tensions and external policy uncertainty require closer monitoring,” the BSP said. “The Monetary Board will continue to assess the impact of prior monetary policy adjustments.”
“Going forward, the BSP will safeguard price stability by ensuring monetary policy settings are conducive to sustainable economic growth and employment,” it added.
