BSP rate cut likely this week - analysts

The Bangko Sentral ng Pilipinas (BSP) is widely expected to lower its benchmark interest rates by 25 basis points (bps) at its monetary policy meeting on Feb. 13 as policymakers would likely shift focus from inflation control to supporting economic growth.

- KEISHA TA-ASAN

Analysts from major financial institutions point to the weaker-than-expected gross domestic product (GDP) growth in the fourth quarter of 2024, alongside a stable inflation environment, as key justifications for the anticipated rate cut.

Jun Neri, lead economist at the Bank of the Philippine Islands, said the BSP would likely lower the target reverse repurchase rate (RRP) by 25 bps to 5.5 percent on Thursday.

"The central bank might use the slower-than-expected growth last quarter as the primary justification for the cut, along with a stable inflation environment that allows the central bank to focus more on boosting the economy," he said.

The Philippine economy expanded by 5.2 percent year-on-year in the final quarter of 2024, falling short of expectations. It brought full-year GDP to 5.6 percent last year, below the government's six to 6.5 percent growth target.

The recent stability of the peso against the dollar will also provide the BSP more room to consider a rate cut as the local currency has strengthened following the US government's decision to postpone tariffs against Canada and Mexico.