THE Philippine central bank lowered its benchmark interest rate by 25 basis points to 5.25 percent on Thursday, citing easing inflation pressures and signs of slowing global growth.
The Bangko Sentral ng Pilipinas (BSP) also trimmed the rates on its overnight deposit and lending facilities to 4.75 percent and 5.75 percent, respectively, as the Monetary Board signaled a shift to a more accommodative policy stance.
The decision comes amid a downward revision in the 2025 inflation forecast to 1.6 percent from 2.4 percent, reflecting easing domestic price pressures.
Forecasts for 2026 and 2027 were slightly raised to 3.4 percent and 3.3 percent, respectively, though the central bank said inflation expectations remain firmly anchored.
The Monetary Board flagged external risks, including softening global economic activity due to uncertainty surrounding U.S. trade policy and escalating conflict in the Middle East. It warned that these factors could dampen domestic growth prospects.
At the same time, the BSP noted upside inflation risks stemming from elevated oil prices, possible adjustments in electricity rates and the imposition of higher rice tariffs.
‘Shot in the arm’
“The decision is a welcome and timely move,” said entrepreneur Steven Yu, past president of the Mandaue Chamber of Commerce and Industry. “This is great news to the business sector as it is exactly the shot in the arm needed by the business community who are faced with stalling growth and anxious with the geopolitical uncertainties in the Middle East.”
Yu said subdued inflation and a steady exchange rate provided the BSP ample room to loosen policy.
“We’re hopeful for two more 25-basis-point cuts within the year. This will help jumpstart expansions, job creation, and provide a lifeline to real estate and related sectors facing headwinds,” he added.
The BSP said it will continue to monitor emerging risks and assess the impact of previous rate adjustments to ensure that monetary settings support price stability while fostering sustainable growth and employment. / KOC