Poll: BSP to deliver another rate cut to support growth
After a disappointing year for economic growth, the Bangko Sentral ng Pilipinas (BSP) may deliver another interest rate cut this week, seeking to bolster domestic momentum following disruptions linked to an expansive anticorruption crackdown.
All 13 economists polled by the Inquirer expect the central bank’s Monetary Board to lower the benchmark overnight borrowing rate by 0.25 percentage point to 4.25 percent at its first policy meeting of 2026 on Feb. 19, a move that would further ease borrowing costs to support the economy.
If realized, the cut would bring cumulative reductions since the easing cycle began in August 2024 to 2.25 percentage points.
Sarah Tan, economist at Moody’s Analytics, said the sluggish growth in the final quarter of 2025 was “worrying” because the weakness came from within the domestic-driven economy.
The assessment followed data showing that gross domestic product expanded just 3 percent in the fourth quarter of 2025—the slowest pace in more than 14 years outside the pandemic—and well below market estimates.
The weak outturn dragged the average growth in 2025 to 4.4 percent, missing the government’s 5.5-percent to 6.5-percent target.
Officials and analysts pointed to a mix of climate-related disruptions and the Marcos administration’s sweeping anticorruption drive that implicated high-ranking officials, a controversy that curbed government spending and weighed on business and consumer confidence.
For Tan, the benign inflation environment would give the BSP enough room.
Consumer prices rose 2 percent in January from a year earlier, ending 10 consecutive months of readings below the central bank’s 2 to 4 percent target range.
“Exports provided the only bright spot, but their strength proved insufficient to offset the drag from weak domestic demand,” she said.
Strategic pause
Although inflation gathered pace and moved back into the official target range last month, BSP Governor Eli Remolona Jr. has reaffirmed that its growth-supporting rate cuts were drawing to a close, leaving room for further easing only if conditions warrant.
Throughout the ongoing campaign to support growth, the Monetary Board paused only once, holding rates steady at its Feb. 13 meeting last year.
Emilio Neri Jr., lead economist at Bank of the Philippine Islands, said that while a cut remains on the table this week, the BSP “is increasingly likely to weigh a strategic pause.”
“After a massive easing cycle since August 2024, Governor Remolona may opt to let the stimulus ‘cure’ circulate before adding more,” Neri said, adding that an outsized half-point reduction would be unnecessary at this point given the limits of monetary policy in compensating for the negative impact of the anticorruption campaign.
Raymond Yeung, an economist at ANZ Research, said restoring confidence by resolving the graft scandal and a reviving government spending would help the economy respond more fully to lower borrowing costs.
“The sharp slowdown in growth in the past quarter and slide in public capital spending will be of more immediate concern for the BSP. However, weak consumer and domestic confidence will likely restrict the impact of the rate cut,” Yeung said. “A solution to the governance-related issues followed by a pickup in infrastructure spending will be pivotal for growth momentum to improve in the Philippines this year.”
******
Get real-time news updates: inqnews.net/inqviber
