BSP easing cycle may end with just one more cut
The Bangko Sentral ng Pilipinas (BSP) is nearing the end of its easing cycle, Governor Eli Remolona Jr. said on Tuesday, signaling that the central bank’s pro-growth push could conclude with just one more interest rate cut—possibly in February—unless “bad surprises” emerge that would justify further easing.
“It still depends on the data. But for now, it’s either we don’t move or we cut,” Remolona told members of the Tuesday Club, adding that the policy rate—currently at 4.5 percent—is now “very close to where we want [it] to be.”
“Those are the likely scenarios,” he said. “But it’s almost unthinkable to raise the policy rate at this point.”
Asked about the timing of another easing move, if any, Remolona said a February rate cut was “on the table.” He noted, however, that the central bank stands ready to do more should economic growth weaken more than expected.
Cutting rates “two more times,” he said, would require a deterioration beyond the BSP’s baseline outlook—a “bad surprise” in the data. Should economic growth in 2026 fall below 5 percent, well under the BSP’s 5.4-percent forecast, monetary authorities could consider additional cuts this year, he said.
“Given the data we have right now and given the projections based on our data, we’re not going to cut. So, the numbers have to move somewhat for us to be convinced to cut one more time,” Remolona added.
Earlier this week, economic managers in the Marcos administration scaled back their growth ambitions as a widening corruption scandal delayed public works and eroded both business and consumer confidence. The government cut its growth target to 5 to 6 percent for this year and to 5.5 to 6.5 percent for 2027, down from the earlier goal of 6 to 7 percent for 2026 through 2028.
Actual growth had already slowed to a four-year low of 4 percent in the third quarter of 2025 amid the sweeping antigraft drive. Remolona said the economy may have expanded by an average of 4.6 percent in 2025, which, if realized, would mark the weakest pace since 2011, excluding the pandemic-induced contraction in 2020.
To help “offset” the drag from the graft fallout, the BSP cut its benchmark rate by a quarter point at the Monetary Board’s Dec. 11 meeting. The move, widely expected by economists, brought total reductions since the easing cycle began in August 2024 to 2 percentage points.
Should the BSP opt to provide additional support to the economy, it has ample room to do so. Inflation rose to 1.8 percent in December from 1.5 percent a month earlier, latest data showed, bringing the 2025 average to 1.7 percent—well below the central bank’s 2 to 4-percent target range.
