BSP cuts key policy rate by 25 bps, signaling end of easing cycle

The Bangko Sentral ng Pilipinas (BSP) has reduced its key policy rate by 25 basis points to 4.5%, indicating that the current cycle of monetary easing is approaching its conclusion.

This marks the fifth consecutive rate cut by the Monetary Board, bringing the reverse repurchase rate to its lowest level since September 2022.

Rates for the overnight deposit and lending facilities were also reduced by 25 basis points each, settling at 4% and 5% respectively.

BSP Governor Eli M. Remolona, Jr. suggested that this might be the final cut in the easing cycle, but clarified that one more 25-bp cut is possible next year, depending on incoming economic data.

Since August of the previous year, the BSP has cumulatively lowered borrowing costs by 200 basis points through a series of 25-bp cuts at its meetings.

He also ruled out an off-cycle or jumbo rate move, stating it could send the wrong signal to markets and worsen the loss of confidence.

The decision to implement another cut was influenced by expectations of continued economic slowdown, attributed in part to subdued business sentiment amidst the ongoing flood control controversy.