BSP cuts key interest rate by 25 basis points to 5.25%

The Bangko Sentral ng Pilipinas (BSP) has cut its key interest rate by 25 basis points to 5.25%, the second consecutive reduction and the lowest in two and a half years.

The rates for the overnight deposit and lending facilities were adjusted to 4.75% and 5.75%, respectively.

BSP Governor Eli Remolona Jr. stated that the Monetary Board's decision was influenced by moderating inflation outlook, with the forecast for this year downgraded to 1.6% from 2.4%.

However, inflation forecasts for 2026 and 2027 were slightly increased to 3.4% and 3.3%, respectively.

Cheaper food prices and moderate consumption are expected to sustain low inflation, though risks from potential global oil price increases due to geopolitical tensions, electricity rate adjustments, and higher rice tariffs are being monitored.

Remolona indicated that another 25 basis point cut may occur this year if conditions remain favorable, emphasizing vigilance in monitoring domestic and external risks.

The BSP aims to safeguard price stability to ensure sustainable economic growth and employment, with the Monetary Board seeing the need for a more accommodative monetary policy stance.