BSP cuts interest rates by 25 bps to 5%, third cut since April

The Bangko Sentral ng Pilipinas' (BSP) Monetary Board reduced interest rates by another 25 basis points, bringing the reverse repurchase rate to 5%, on Thursday, August 28.

This marks the third consecutive rate cut since April and brings the total reduction to 150 basis points over the past year.

BSP Governor Eli Remolona Jr. stated that this rate reduction places the country in a 'sweet spot' with inflation cooling to 0.9% in July due to declining rice prices, and forecasts indicate stable inflation rates of 1.7%, 3.3%, and 3.4% for 2025, 2026, and 2027 respectively.

The central bank noted potential risks from possible electricity rate adjustments and higher rice tariffs but emphasized its commitment to price stability through monetary policy settings that support sustainable economic growth.

While domestic demand remains strong, the Philippines' GDP grew 5.5% in the second quarter, just below the government's target range of 5.5% to 6.5%, and the BSP has space for one more rate cut before marking the end of its easing cycle.