The Bangko Sentral ng Pilipinas (BSP) has signaled that its interest rate easing cycle has come to an end, with Governor Eli Remolona saying the latest 25-basis-point adjustment will likely be the last.
“It is fairly safe to say it’s over,” Remolona said, indicating that the central bank does not expect further rate cuts in the near term. The BSP’s Monetary Board opted for a modest move, reflecting a consensus to avoid large adjustments and maintain a cautious stance.
For households and businesses, the end of rate cuts means borrowing costs are unlikely to fall further. Loans for homes, cars, and business expansion may remain at current levels, limiting relief for consumers hoping for cheaper credit. At the same time, stable rates provide predictability, allowing firms to plan investments without worrying about sudden policy shifts.
Remolona noted that inflation is still expected to average 6.3 percent this year and 4.3 percent next year, with price growth likely staying above 5 percent in the near term. While inflation is not seen as becoming unmanageable, the BSP remains cautious.
He warned that if inflation expectations were to become unanchored—meaning people start expecting persistently high inflation—the central bank could respond with a larger 50-basis-point rate hike.
Despite steady rates, economic growth is expected to remain resilient. BSP Deputy Governor Zeno Ronald Abenoja said the economy is still projected to expand above the earlier 4 to 5 percent forecast, with growth possibly nearing 6 percent by 2027. Stronger expansion is expected to materialize in the second half of that year.
Remolona added that while monetary policy typically takes about a year to fully affect economic activity, the lag could be shorter this time, suggesting businesses and consumers may feel the impact sooner.
The BSP chief also highlighted risks from global energy prices, urging the Philippines to diversify fuel sources rather than rely heavily on oil and a limited number of suppliers. This, he said, could help stabilize prices and reduce inflation pressures over time.
With the easing cycle effectively over, the BSP is shifting to a wait-and-see approach. Interest rates are expected to hold steady, balancing the need to control inflation while supporting continued economic growth.
