Economists see 25- basis-point BSP rate cut this week

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February 16, 2026 | 12:00am

MANILA, Philippines — Private sector economists expect the Bangko Sentral ng Pilipinas (BSP) to deliver another 25-basis-point (bp) policy rate cut at its Feb. 19 meeting, citing slowing growth momentum and inflation that remains within target.

In a research note, Metropolitan Bank & Trust Co. (Metrobank) said slowing activity would take center stage at the policy meeting, with the Monetary Board expected to cut the policy rate by 25 bps to 4.25 percent to support domestic growth.

The bank pointed to fourth-quarter 2025 gross domestic product (GDP) growth of just three percent, which pulled down full-year expansion to 4.4 percent.

While economic activity is seen gaining traction in the second half of 2026, Metrobank said near-term vulnerabilities warrant a proactive response. Inflation remains manageable despite a mild uptick at the start of the year, with consumer prices rising to two percent in January from 1.8 percent in December.

Metrobank expects inflation to trend higher toward the lower end of the BSP’s two to four percent target range this year, partly due to base effects, but said rice imports should temper pressures.

“With inflation firmly within the target range, the BSP retains room to recalibrate policy in favor of growth,” the bank said.

Metrobank chief economist Nicholas Mapa said the central bank is likely to trim rates by 25 bps as growth has “slowed to multi-year lows,” while inflation remains consistent with the BSP’s objectives.

“The decision to ease further post-February will remain data-dependent, as always, with the window for additional rate cuts open for only a couple more months given inflation dynamics,” Mapa said.

Other economists broadly share the same call.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said he is looking at a 25-bp cut this week to help support or restart the economy as inflation remains manageable.

Alvin Arogo, economist at Philippine National Bank, said the Monetary Board would likely cut the target reverse repurchase rate by 25 bps to 4.25 percent “because of the weak fourth-quarter GDP performance and low January inflation.”

Jun Neri, lead economist at Bank of the Philippine Islands, also expects a 25-bp cut on Feb. 19, but said a larger move is unlikely.

“We don’t think 50 bps in one go is necessary as rate cuts can only do so much in the current situation,” Neri said, adding that real growth has lost momentum and is significantly below potential.

Neri noted that while the slowdown is largely due to massive government spending cuts, risks to investor sentiment may compel the BSP to bring policy settings below the estimated four to five percent neutral nominal rate, especially with headline inflation and the exchange rate at levels the BSP is comfortable with.

Still, after a cumulative 200-bp easing since August 2024, he said the central bank may opt for a pause to allow stimulus to work.

“We expect another 25 bps before the end of 2026 as growth for the first semester of 2026 is likely to remain soft just as inflation is expected to remain well within the BSP’s two to four percent target,” Neri said.

He added that cuts may stop once inflation heads above three percent around the third quarter of 2026, with no further easing seen after the June 18 meeting.

China Banking Corp. (Chinabank) Research likewise expects a 25-bp cut to 4.25 percent, which would be the sixth consecutive reduction, citing within-target inflation as well as the economy’s lackluster 4.4 percent growth in 2025.

Lower rates could help lift business sentiment and spur loan demand, the bank said, adding that the recent peso strength gives the central bank more room to cut.

Chinabank Research said softer demand indicators support the case for easing, noting slower household spending, moderating lending growth and weaker business and consumer sentiment in BSP surveys. Another cut could lower borrowing costs and encourage near-term spending and investment, helping strengthen the recovery.

Angelo Taningco, research head and chief economist at Security Bank Corp., also sees a 25-bp cut to 4.25 percent, citing the need to stimulate demand after the GDP slowdown in the third and fourth quarters of last year.

The BSP targets inflation at three percent, with a tolerance band of two to four percent, and has signaled that future moves will remain guided by incoming data on prices, growth and financial conditions.