BSP eyes two more rate cuts this year as inflation stays low

Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said on Friday that at least two additional interest rate cuts could be implemented this year, supported by easing inflation and improved economic conditions.

“So far, the hard data says we have plenty of room to cut, especially since inflation is low,” Remolona said during a press briefing at the BSP headquarters in Manila.

The central bank’s latest inflation reading showed headline inflation dropped to 1.4% in April 2025—its lowest level since November 2019. According to Remolona, the downtrend was aided by government-initiated non-monetary interventions aimed at controlling key commodity prices.

“We find that what we call the non-monetary measures that the administration is putting in place, they seem to help with inflation,” he noted.

Among these measures are the PHP20 per kilo rice program and the Department of Agriculture’s intensified effort to offer pork at subsidized prices—initiatives that have played a role in reducing food inflation, a major driver of overall price levels.

Since 2024, the BSP has cut policy rates by a total of 100 basis points in response to improving inflation dynamics and a relatively stable macroeconomic environment. Remolona clarified, however, that the future rate cuts will be implemented cautiously and not in rapid succession.

“We still have to be careful because we don’t want to cut too much. If we cut too much to the point where our demand exceeds our capacity, then that will be inflationary,” he warned.

He added that each adjustment, likely at 25 basis points per policy meeting, would be data-driven and guided by the need to maintain price stability without overheating the economy.