Analysts expect BSP to cut rates further in H2

Analysts anticipate that the Bangko Sentral ng Pilipinas (BSP) will continue its monetary easing with further rate cuts expected in the second half of the year.

The BSP recently resumed its rate-cutting cycle by implementing a 25-basis-point reduction, bringing the target reverse repurchase rate to 5.5%.

BSP Governor Eli M. Remolona, Jr. indicated that additional rate reductions are probable this year, as the current benchmark rate is still considered 'slightly restrictive'.

Aris Dacanay, economist at HSBC Global Research, specifically forecasts two more 25-basis-point rate cuts in August and December, potentially lowering the policy rate to 5% by year-end.

This implies the BSP may cut rates in alternate meetings, specifically in August and December, and not in June or October.

However, Dacanay outlined three scenarios that could lead the BSP to ease at each of its last four meetings for 2025: a deteriorating global growth outlook due to US tariffs, a widening gap in real policy rates between the US Federal Reserve and the BSP, or a strengthening peso due to increased foreign fund inflows.