BSP cuts key rate by 25bps to 5.5%, lowers inflation forecasts

The Bangko Sentral ng Pilipinas (BSP) reduced its key interest rates by 25 basis points on Thursday, bringing them down to 5.5%, in response to a more challenging external environment and lower inflation expectations.

Inflation forecasts were revised downwards for the next three years: from 3.5% to 2.3% for 1Q 2025, from 3.7% to 3.3% for 2026, and remaining at 3.25% for 2027.

Private-sector economists predict the central bank will cut rates by an additional three-quarters of a percentage point by year-end in response to lower inflation risks and global economic uncertainties.

BSP Governor Eli Remolona Jr. noted that US tariffs on Philippine exports were factored into their policy decision, despite ongoing uncertainty over future tariff decisions.

The BSP emphasized easing inflation risks as the primary factor for shifting toward a more accommodative monetary policy stance.