By the staff
The Bangko Sentral ng Pilipinas lowered its key interest rate by 25 basis points to 4.25 percent on Thursday, seeking to boost confidence in a slowing economy while keeping inflation risks contained.
The move extends an easing cycle that began in August 2024, bringing total cuts to 225 basis points. The overnight deposit and lending rates were adjusted to 3.75 percent and 4.75 percent, respectively.
“Economic growth has undershot the BSP’s expectations due to weaker domestic demand. Latest indicators point to a recovery in the second half of the year, but growth will depend largely on how quickly confidence recovers,” the central bank said.
GDP expanded 3 percent in Q4 2025, pulling full-year growth to 4.4 percent. BSP Governor Eli Remolona Jr. said the rate cut aims to revive investment and consumption.
“Our decision today should help to restore confidence, boosting investment and consumption. The pace of economic recovery will depend on how quickly confidence returns. As always, policy decisions will be driven by the data we have at the time we make those decisions,” he said.
BSP Deputy Governor Zeno Abenoja projected GDP growth of 4.6 percent in 2026, accelerating to 5.9 percent in 2027, while raising inflation forecasts to 3.6 percent this year and 3.2 percent in 2027 due to temporary supply-side pressures.
Remolona cautioned that future policy is “less certain,” noting the impact of previous cuts takes time and further easing depends on whether confidence returns.
“Our primary mandate is inflation. We support growth, we do want the Philippines to grow. But at the same time our main mandate is still inflation,” he said.
The BSP will next review policy on April 23.
