Metro Manila, Philippines – The policy-making Monetary Board (MB) has cut the interest rate by a quarter of a percentage point to 6.25 percent, making credit easier on the back of improving economic conditions.
MB Chairman and Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said in a media briefing on Thursday that the lower cost of money is supported by expectations of declining inflation rate, a solid economic expansion, and declining jobless rate, among others.
“We hope it (lower interest rate) will make lending rates lower, make credit easier and that has side effects on consumption, investment. It’s one move, we may need further moves in the same direction,” he said.
The rate cut would largely impact credit on consumer products like housing, automotive, and credit card, among others.
The MB, in an off-cycle meeting, last raised the policy rate to 6.5 percent in October 2023 and kept this unchanged for 10 months.
Remolona said monetary officials expected the rate cut to track the US Federal Reserve’s likely move to reduce interest rate by half a percentage point during its meeting in September.
On the consumer price outlook, Remolona said inflation is projected to trend downward to within the government’s 2‑4 percent target range despite the uptick in July.
He said inflation forecasts for 2024 and 2025 are at 3.3 percent and 2.9 percent, respectively, citing the impact of lower rice tariff, while the forecast for 2026 is still within target at 3.3 percent.
“With inflation on a target-consistent path, the current macroeconomic outlook supports a calibrated shift to a less restrictive monetary policy stance,” Remolona said.
