TY-LED Metropolitan Bank & Trust Co. (Metrobank) expects the Bangko Sentral ng Pilipinas (BSP) to cut policy rates by 25 basis points at its upcoming Feb. 19, 2026, meeting, citing slowing economic growth and manageable inflation.
In a market outlook published on Wealth Insights, Metrobank said the Monetary Board may reduce its key rate to 4.25 percent as softer domestic conditions outweigh near-term price pressures.
The bank noted that gross domestic product (GDP) growth slowed to three percent in the fourth quarter of 2025, bringing full-year expansion to 4.4 percent. Weaker household spending and subdued private investment weighed on overall output, reinforcing the case for monetary easing.
Metrobank said inflation remains within the BSP’s 3±1 percent target band despite a slight uptick to two percent in January from 1.8 percent in December. Higher utility costs drove the increase, while easing food prices helped contain broader pressures.
With inflation seen trending toward the lower end of the target range this year, the bank said the BSP retains room to recalibrate policy in favor of growth. However, it cautioned that sustained increases in rental and utility costs could limit further easing beyond February.
A rate cut would narrow the interest rate differential between the Philippines and the United States to 50 basis points. Still, Metrobank said currency movements may depend more on business and consumer confidence than rate spreads alone.
The bank added that additional easing in April remains possible if inflation stays subdued, underscoring that monetary policy will remain data-dependent.
On Feb. 5, the BSP reiterated that its monetary easing cycle is “nearing its end,” as domestic demand is expected to improve following a series of policy rate cuts since 2024.
Since August 2024, the BSP has reduced key policy rates by a total of 200 basis points to support domestic growth, as inflation remained low, averaging 1.7 percent last year. / KOC