BSP trims policy rate to 5% with fresh 25-bps cut

The Bangko Sentral ng Pilipinas (BSP) reduced its benchmark interest rate by another 25 basis points on Thursday, bringing the reverse repurchase rate to 5 percent.

Rates on the overnight deposit and lending facilities were likewise lowered to 4.5 percent and 5.5 percent, respectively. The BSP has now cut policy rates by a cumulative 150 basis points since last year.

“Based on the latest data, I think this puts us at our sweet spot for both inflation and output,” BSP Governor Eli Remolona Jr. said in a briefing. “The policy rate itself is at our Goldilocks rate, neither too high, not too low.”

The central bank projects inflation at 1.7 percent this year, 3.3 percent in 2026, and 3.4 percent in 2027, with expectations seen to remain well-anchored. Remolona noted, however, that possible electricity rate adjustments and higher rice tariffs could pose upside risks.

Despite external headwinds from global trade and US policy shifts, the BSP said domestic demand has remained firm. It expects cumulative rate cuts to help support growth and enable the government to achieve the lower end of its 5.5 to 6.5 percent economic growth target for 2025.

“I think we have space for one more cut. If the data develops the way we think it will, then maybe one more cut this year,” Remolona said, adding the Monetary Board will continue to calibrate its response based on inflation and growth outlook.

The BSP reiterated its commitment to safeguard price stability while ensuring monetary policy supports sustainable economic growth and employment.