The Bangko Sentral ng Pilipinas (BSP) has lowered its benchmark interest rate by 25 basis points to 5 percent, marking the central bank’s first rate cut of the year and signaling a shift toward a more accommodative monetary policy stance.
The Monetary Board also adjusted the overnight deposit and lending rates to 4.5 percent and 5.5 percent, respectively. The BSP cited subdued inflation, a stable peso, and the need to bolster domestic demand amid global economic headwinds as key considerations behind the decision.
With inflation forecast to remain within target—1.7 percent for 2025 and 3.3–3.4 percent through 2027—and inflation expectations well-anchored, the BSP noted sufficient policy space to ease rates without jeopardizing price stability. Recent consumer activity data showed a notable slowdown in the second quarter, while foreign direct investment posted modest growth.
“The policy adjustment reflects the BSP’s commitment to supporting economic activity while maintaining price and financial stability,” the central bank said in a statement. It added that emerging global risks, including the impact of U.S. policies on trade and investment, would continue to be closely monitored.
Analysts view the move as a proactive step to sustain the country’s growth momentum amid weak external demand and lingering global uncertainties. The BSP emphasized that future policy decisions will remain data-dependent, balancing inflation risks with the goal of fostering sustainable growth and employment.
