THE Bangko Sentral ng Pilipinas (BSP) cut its key policy rate by 25 basis points to 4.75 percent on Thursday, Oct. 9, 2025, citing easing inflation and signs of moderating economic growth.
The Monetary Board also reduced the interest rates on the overnight deposit and lending facilities to 4.25 percent and 5.25 percent, respectively.
“The outlook for inflation remains benign and well within the target range,” the BSP said, noting that inflation expectations continue to be well-anchored. While possible adjustments in electricity rates and rice import tariffs could add some upward pressure, the central bank said overall risks to the inflation outlook are limited as price pressures are expected to ease.
BSP Gov. Eli Remolona Jr. said growth prospects have weakened due to governance concerns affecting business sentiment.
“The outlook for growth has softened in the near term. Governance concerns on public infrastructure spending have weighed on business sentiment,” Remolona said during the Monetary Policy Stance Briefing on Thursday. “All in all, we see more scope for a more accommodative monetary policy.”
The BSP said moderating domestic demand and lingering uncertainty from the global environment also weighed on its growth outlook.
“On balance, the Monetary Board sees scope for a more accommodative monetary policy stance,” it said. “The favorable inflation outlook and moderating domestic demand provide room to further support economic activity.”
A lower policy rate reduces the cost of borrowing for banks, which often translates to lower lending rates for companies and households.
Businesses can access cheaper credit to expand operations, invest in new projects, or restock inventory. Consumers may find it more affordable to take out loans for homes, cars, or other big-ticket items, which can boost spending. Easier financing conditions can also encourage private investment and expansion, leading to more job creation.
The central bank said it will continue to monitor emerging risks and ensure that monetary policy remains supportive of sustainable growth while maintaining price stability. / KOC