BSP set for third interest rate cut this year

The Bangko Sentral ng Pilipinas (BSP) is expected to cut benchmark interest rates by another 25 basis points on August 28, marking its third consecutive reduction this year.

Headline inflation eased to 0.9 percent in July, the lowest since November 2019, while GDP growth was slightly below target at 5.4 percent for the first half of 2025.

Analysts like Union Bank's Carlo Asuncion and China Bank Research cite easing inflation and modest economic growth as key reasons for further monetary easing.

Bank of the Philippine Islands' Jun Neri warned that an uncertain outlook may force the BSP to reverse some rate cuts in future, while HSBC economist Aris Dacanay sees room for more rate reductions this year and early 2026.

Foreign research houses like MUFG Bank and DBS also expect further easing, with MUFG predicting a total of 50 basis points cut by year-end, bringing the policy rate to 4.75 percent.