GlobalSource: Rate cut a 'wake-up call' to Malacañang, Congress

THE BANGKO SENTRAL ng Pilipinas’ (BSP) recent policy rate reductions may fall short in boosting the economy amid slow monetary policy transmission and persistent structural issues that hinder growth, GlobalSource Partners said.

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In a commentary published late on Monday, GlobalSource Principal Advisor Diwa C. Guinigundo said the Philippine economy now needs structural reforms, stronger fiscal coordination and restored confidence beyond just an accommodative monetary policy.

"Despite substantial cumulative rate reductions, economic momentum has yet to respond decisively," said Mr. Guinigundo, who was also a former deputy governor at the BSP.

"Private consumption remains soft, business confidence weak and tentative, and investment activity highly uneven."

In 2025, the country’s gross domestic product (GDP) grew by 4.4% — the slowest since the pandemic — after GDP expanded by 3% in the fourth quarter.

This came amid the flood control corruption scandal, wherein some Public Works officials, lawmakers and private contractors allegedly received kickbacks from some infrastructure projects.

The scandal dampened consumer and business confidence, and dragged household consumption, investments and government spending.

This pushed the Philippine central bank to extend its easing cycle as it sought to spur domestic demand and boost the sluggish economy.

Last week, the BSP delivered its sixth straight 25-basis-point (bp) cut, marking the third one prompted by growth concerns from the flood mess. This brought the key policy rate to an over three-year low of 4.25%.

The BSP has now slashed benchmark borrowing costs by a cumulative 225 bps since it began easing in August 2024.