Manila, Philippines – The Bangko Sentral ng Pilipinas (BSP) has delivered a widely expected rate cut at its last policy meeting for the year saying the economy will need some support from lower borrowing costs.
The benchmark policy rate now stands at 4.5 percent, a three-year-low after the policymaking Monetary Board slashed it by a quarter-of-a-percentage point (25 basis points) on Thursday, Dec. 11.
The move was in line with forecasts from all but one of 27 economists in a Reuters poll.
The rate cut, which had been flagged by BSP Governor Eli Remolona, comes as a corruption scandal tied to infrastructure projects clouds the growth outlook.
The controversy has implicated public works officials, senators, and congressmen, sparking nationwide protests and constraining infrastructure spending.
“The cut will revive economic activity a bit at a time when painful governance issues around infrastructure investments have weakened government spending, business confidence and domestic demand,” Remolona told a press conference.
He added the move would not address the scandal but it could “compensate” for its impact on investor sentiment.
Remolona said growth concerns now outweigh price risks, with inflation subdued.
Inflation has averaged 1.6 percent in 2025, below the central bank’s 2 percent to 4 percent target range for the year. It is forecast to reach 3.2 percent in 2026 before easing to 3.0 percent in 2027.
“The economy is certainly in need of some support,” Capital Economics said in a research note. “We are still expecting two further 25 bps cuts” for 2026, it said.
The central bank has eased rates by a cumulative 200 basis points in its current cycle, with Remolona expressing confidence that the accommodative policy stance will support economic recovery next year.
Remolona has said growth this year likely has slowed to between 4 percent and 5 percent, below the government’s 5.5 percent to 6.5 percent target, and slower than the previous year’s 5.6 percent expansion.– with Reuters
