One more rate cut possible – BSP

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

December 13, 2025 | 12:00am

MANILA, Philippines — The Bangko Sentral ng Pilipinas signaled it may deliver one final rate cut in 2026, with BSP Governor Eli Remolona Jr. saying the decision will depend heavily on incoming data amid weaker domestic growth and lingering fallout from the public infrastructure scandal.

In a chance interview, Remolona stressed that any additional easing next year would be modest.

“Just one more (rate cut) depending on the data,” he said.

The governor also dismissed the idea of an aggressive move, noting that a larger cut could send the wrong signal to financial markets.

He said slowing economic growth and weakening demand prompted the latest 25-basis-point cut on Dec. 11, noting that monetary easing can help support the demand side of the economy.

“But if we cut by 50 basis points or do an off-cycle move, it will worsen the loss of confidence because people will say, ah, the BSP is desperate,” he said.

The BSP chief said any potential cut would be undertaken in a scheduled policy meeting.

“Our next meeting is in February. So if we’re going to cut, it’s during a regular meeting. Not off-cycle,” he added.

The governor reiterated that economic conditions have deteriorated more sharply than expected.

He said the country could grow only by 3.8 percent in the fourth quarter, slower than the four percent print posted in the third quarter. If realized, this would bring average growth to around 4.7 percent for 2025, lower than the government’s target of 5.5 to 6.5 percent.

In a separate interview with Bloomberg TV, Remolona elaborated that the BSP’s decision to cut rates was due to the loss of confidence amid the alleged misuse of billions of pesos in flood control projects.

While the BSP could not address the scandal directly, Remolona said monetary policy could help offset its economic impact.

“We can compensate for the loss of confidence by reducing the policy rate. Growth suffered because of that scandal,” he said.

Asked whether further easing is possible amid a weakening peso and potential outflows, the governor replied, “We may cut one more time or we may not. That’s where we are.”

Despite ongoing protests linked to the scandal, Remolona said the situation has remained “relatively peaceful.” He also noted that credit watchers have not shifted to a pessimistic stance.

The peso has also weakened, recently moving past the 59:$1 level. Remolona said the BSP intervenes only to calm sharp swings.

“We’re intervening a little bit. We’re not intervening to hit a target for the peso. We’re intervening just to dampen volatility,” he said. The central bank uses its standard tools, “where we either sell dollars or we buy dollars.”

Remolona said inflation is expected to remain within the BSP’s two to four percent target. Risks remain, but are manageable.

Because inflation is under control, the BSP’s focus will shift to economic momentum. “If growth is weaker than we had hoped, then we would cut,” Remolona said. “If the output gap turns out to be more negative than we thought, then we would ease.”

He added that current data suggests a slower rebound, saying the latest numbers indicate recovery may be “delayed by one quarter or two,” with a “significant recovery” seen only in the second half of 2026.