The Bangko Sentral ng Pilipinas (BSP) today decided to lower its key interest rate, the target reverse repurchase (RRP) rate, by 0.25 percentage points to 4.5 percent. At the same time, the rates for overnight deposits and loans were adjusted to 4 percent and 5 percent, respectively.
BSP governor Eli Remolona Jr. noted Inflation remains under control, and expectations for future inflation are stable. The BSP slightly revised its inflation forecast for 2026 to 3.2 percent and for 2027 to 3 percent.
Analysts like Dan Roces at BDO Unibank said it is likely that the BSP will continue easing its hold over interest rates into 2026 on the assumption that inflation holds steady and external shocks do not force the alteration of the price path.
Other analysts have noted that growth, measured as the gross domestic product (GDP), has softened in the third quarter to 4.4 percent, missing the consensus of around 5.2 percent and much slower than growth of 5.5 percent in the second quarter.
Going forward, the BSP also said the outlook for the economy has weakened somewhat. Business confidence has fallen due to concerns about governance and uncertainty in global trade. Still, domestic demand is expected to recover gradually as the effects of the rate cuts take hold and as government spending improves in both pace and quality.
Overall, the BSP believes that the period of lowering interest rates is almost over. Any further cuts will likely be small and will depend on how the economy performs. The BSP will continue to make sure its policies support stable prices while encouraging sustainable economic growth.
