The Bangko Sentral ng Pilipinas (BSP) reduced its benchmark interest rate by 25 basis points on Thursday, as the monetary board responded to a more favorable inflation outlook and signs of slowing global economic activity.
The BSP’s target reverse repurchase (RRP) rate, which serves as its main policy rate, was lowered to 5.25 percent. Correspondingly, the rates on the overnight deposit and lending facilities were adjusted to 4.75 percent and 5.75 percent, respectively.
The monetary board attributed the move to a moderation in inflation expectations, with the 2025 inflation forecast falling significantly to 1.6 percent from a previous estimate of 2.4 percent. While projections for 2026 and 2027 ticked up slightly—to 3.4 percent (from 3.3 percent) and 3.3 percent (from 3.2 percent), respectively—BSP noted that inflation expectations remain well anchored.
“The decision reflects our assessment that prevailing monetary policy settings can be adjusted to provide greater support to the economy, given the evolving inflation environment,” the BSP said.
The central bank also cited mounting risks from slowing global growth, particularly due to uncertainty in U.S. trade policy and continued geopolitical tensions in the Middle East, as factors likely to drag Philippine economic performance. Domestically, the BSP flagged upward pressures on inflation from rising oil prices, energy rate adjustments, and higher rice tariffs.
Despite these risks, the central bank signaled that it sees room for a more accommodative monetary policy stance, while emphasizing that future decisions will remain data-dependent. The BSP reaffirmed its commitment to safeguarding price stability while supporting sustainable economic growth and employment.
“Emerging external risks warrant closer monitoring, but current conditions allow some policy space to support domestic demand,” the central bank concluded.
