THE local business community has welcomed the recent policy rate cut by the Bangko Sentral ng Pilipinas (BSP), with a business leader expressing confidence in the prospect of further monetary easing to spur economic activity.
Entrepreneur Steven Yu, former president of the Mandaue Chamber of Commerce and Industry, said the business sector is “highly confident” that the central bank’s total policy rate reduction of 75 basis points for 2025 is achievable.
He also added that the possibility of another round of Reserve Requirement Ratio (RRR) reductions remains on the table and could be realized between 2025 and 2026.
“We are looking at another potential RRR cut of at least 100 basis points. This would significantly boost liquidity and encourage more investments,” Yu said on Friday, April 11, 2025.
He described the BSP’s latest move as a “welcome development” that is expected to reinvigorate business and consumer confidence.
“This development is a significant driver to reverse the slowing momentum in real estate and consumption. By jumpstarting another round of growth, we’re looking at more job creation from the private sector, which is critical to addressing the needs of the majority of our population,” he added.
The BSP on Thursday, April 10 slashed its key policy rate by 25 basis points, bringing the overnight borrowing rate to 5.50 percent. Rates for overnight deposit and lending facilities were also adjusted to five percent and six percent, respectively. The move comes amid improving inflation data and a more stable economic environment.
In its statement, the Monetary Board cited revised inflation forecasts as a key factor behind the rate cut. The 2025 inflation outlook was lowered to 2.3 percent from 3.5 percent, while projections for 2026 and 2027 were also brought down to 3.3 percent and 3.2 percent, respectively—all comfortably within the BSP’s target range of two to four percent.
“The more manageable inflation outlook and the risks to growth allow for a shift toward a more accommodative monetary policy stance,” the BSP said.
While inflation risks remain—such as potential hikes in transport fares, utility rates and meat prices—the BSP noted that these are now broadly balanced by downside risks including lower rice tariffs and subdued global demand.
Yu noted that the BSP’s monetary policy flexibility, supported by low inflation expectations, gives it room to implement further rate cuts. He stressed that these measures could have a strong ripple effect on sectors that are sensitive to borrowing costs, particularly real estate and retail.
As global economic headwinds continue to pose risks, the BSP flagged a more challenging external environment that could impact Philippine growth. Nevertheless, local businesses remain upbeat, banking on domestic policy support to sustain momentum in the coming years. / KOC