BSP delivers 2nd straight rate cut

THE BANGKO Sentral ng Pilipinas (BSP) lowered policy rates for a second straight meeting on Thursday and signaled at least one more cut this year to support economic growth.

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The Monetary Board on Thursday reduced the target reverse repurchase rate by 25 basis points (bps) to 5.25% from 5.5%, as expected by 15 out of 16 analysts in a BusinessWorld poll last week. This was the lowest level in two and a half years.

Rates on the overnight deposit and lending facilities were also lowered to 4.75% and 5.75%, respectively.

"If things remain on track, we will probably cut once more (by 25 bps)," BSP Governor Eli M. Remolona, Jr. said during a briefing.

The Monetary Board has three more policy meetings scheduled for this year.

"On balance, the Monetary Board sees the need for a more accommodative monetary policy stance. Emerging risks to inflation from rising geopolitical tensions and external policy uncertainty require close monitoring," he said.

Mr. Remolona also noted a possible slowdown in the global economy, mainly due to the uncertainty arising from US tariff policy and the Middle East conflict.

"This would lead to slower growth in the Philippines," he said.

Economic managers are targeting 6-8% gross domestic product (GDP) growth this year. In the first quarter, GDP grew by a weaker-than-expected 5.4%.

Mr. Remolona said the outlook for inflation "moderated" and expectations remain "well-anchored." Inflation eased to 1.3% in May, the slowest pace in over five years and below the 2-4% target range.