BSP signals end of monetary easing cycle

The Bangko Sentral ng Pilipinas (BSP) on Thursday said its monetary easing cycle is “nearing its end,” as domestic demand is expected to improve following a series of policy rate cuts since 2024.

January inflation rose to 2 percent from 1.8 percent in December 2025, remaining at the lower end of the government’s 2–4 percent target and within the BSP’s forecast of 1.4–2.2 percent.

“The inflation outlook continues to be benign while inflation expectations remain well anchored,” the BSP said.

The central bank noted that domestic economic output is expected to stay weak amid declining business sentiment, driven by governance concerns and global trade uncertainties.

“Nevertheless, domestic demand is expected to rebound gradually as the effects of monetary policy easing work their way through the economy and public spending improves,” it said.

“On balance, the Monetary Board sees the monetary policy easing cycle as nearing its end. Any further easing is likely to be limited and guided by incoming data.”

The BSP’s first policy rate-setting meeting this year is set for Feb. 19, where further cuts in key interest rates are widely anticipated. Since August 2024, the BSP has reduced policy rates by 200 basis points to support domestic growth as inflation averaged 1.7 percent last year.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said January’s inflation remains “relatively benign,” and forecasted an average of 3 percent inflation for 2026.

“Nevertheless, that could still support monetary easing measures such as cut/s in local policy rates and banks’ reserve requirement ratio (RRR), as part of the policy priorities to boost economic/GDP growth,” Ricafort added.