BSP seen to cut rates further as inflation eases — BMI

The Bangko Sentral ng Pilipinas (BSP) is expected to continue easing its monetary policy in the second half of 2025 as slowing inflation gives room for more rate cuts, Fitch Solutions unit BMI said in a report Thursday.

BMI projected the BSP’s benchmark policy rate to fall to 4.75 percent by yearend, from the current level, as inflation cooled to a nine-year low of 0.9 percent in July. 

The firm also revised its full-year inflation forecast to 1.6 percent, down from its earlier 2.2 percent outlook.

“We expect the BSP to maintain a pro-growth policy stance in H2 2025 amid growing economic uncertainty,” BMI said, noting that low inflation and modest growth provide space for monetary easing. 

The Philippine economy grew 5.4 percent in the first quarter and inched up to 5.5 percent in the second quarter.

Despite further rate cuts, BMI said the peso is likely to strengthen slightly as developments in the United States weigh on the dollar. It forecasts the peso to close the year stronger than the current P57.22 per USD, citing risks of weakening investor confidence in the greenback.