BSP cuts key rate by 25bps to 5.50%, forecasts lower inflation

The Bangko Sentral ng Pilipinas (BSP) reduced its key interest rates by 25 basis points to 5.50 percent on Thursday, April 10, in response to potential economic risks from US President Donald Trump's tariffs and other global headwinds.

Deutsche Bank Research had predicted a rate cut due to inflation falling below the BSP’s target and the economy facing a negative output gap until the end of 2026.

Teresa Mendoza from the Asian Development Bank (ADB) noted that modest inflation and record-high real policy rates support further easing by the BSP, while Cristina Lozano highlighted the Philippines' preliminary position of strength with low unemployment and sustained public investment.

Governor Eli M. Remolona Jr. stated at a press conference that further interest rate cuts are expected this year to bolster local economic expansion amid global challenges.

The BSP revised its inflation forecasts downward for 2025 to 2.3 percent from 3.5 percent, and for 2026 to 3.3 percent from 3.7 percent, signaling a shift in priority toward supporting economic growth.