Philippine Central Bank Cuts Rate as Expected

The Central Bank of the Philippines reduced its benchmark interest rate by 25 bps to 4.25% during its February 2026 meeting, bringing total easing since August 2024 to 225 bps. The move, widely expected, comes as manageable inflation allowed policymakers to support an economy weakened by softer domestic demand and fallout from a major corruption scandal tied to infrastructure spending. Economic growth slowed to about 3% last quarter, among the weakest in Southeast Asia, as confidence deteriorated. While the inflation outlook remains contained, forecasts for 2026 were revised slightly higher due mainly to temporary supply-side pressures, with inflation still projected to return close to the 3% target by 2027. The central bank said activity could recover in the second half of the year if confidence improves, stressing that future policy decisions will remain data-dependent. Overnight deposit and lending rates were adjusted to 3.75% and 4.75%, respectively.

The Central Bank of the Philippines cut its benchmark interest rate by 25 bps to 4.5% during its final meeting of the year, marking the fifth straight reduction and bringing total cuts this year to 125 bps. The move aligns with market expectations and lowers borrowing costs to their lowest since October 2022, as a benign inflation outlook allows policymakers room to support growth. Inflation forecasts for 2026 and 2027 were slightly raised to 3.2% and 3.0%, remaining within the BSP’s 2%-4% target. The Monetary Board noted that domestic growth has weakened amid softer business sentiment, governance concerns, and lingering global trade uncertainty, though demand is expected to recover gradually as the effects of monetary easing and improved public spending take hold. The BSP also indicated that the easing cycle is nearing its end, with any additional cuts likely limited and guided by incoming data. Overnight deposit and lending rates were also adjusted to 4.00% and 5.00%, respectively.

The Central Bank of the Philippines cut its benchmark interest rate by 25 bps to 4.75% during its October 2025 meeting, defying market expectations of a hold at 5%. This move brought the rate to its lowest level since October 2022, as the central bank cited a benign inflation outlook, with price growth well within the official target range and inflation expectations remaining firmly anchored. However, potential electricity rate adjustments and tariff hikes on rice imports could add upward pressure on prices. Meanwhile, the Monetary Board highlighted a weakening domestic growth outlook, partly due to dampened business sentiment stemming from concerns over governance and the implementation of public infrastructure projects. Additionally, signs of softening demand reflect persistent uncertainties in the external environment. The central bank’s overnight deposit and lending facility rates were also lowered to 4.25% and 5.25%, respectively.