BSP hints at 50-bp rate cut, 200-bp reserve req reduction

Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona has hinted at a potential 50 basis point reduction in the monetary policy rate this year.

Remolona also suggested a 200 basis point cut in banks' reserve requirement ratio, bringing it down to 5 percent by June or July.

The BSP chief noted that an initial plan for a larger total policy rate cut of 100 or 75 basis points was unlikely due to persisting inflation concerns and the need for 'policy insurance'.

Remolona emphasized that the cuts would be gradual, with 25 basis points likely in both halves of the year.

The BSP will monitor GDP growth before making a final decision on these rate reductions.

Philippine GDP grew by 5.6 percent in 2024 but missed the government's target of 6 to 6.5 percent.