BSP cuts key rate amid growth slump

THE BANGKO SENTRAL ng Pilipinas (BSP) lowered its key policy rate by 25 basis points (bps) for a sixth straight meeting, a move seen to help the economy regain its momentum following a slowdown last year.

- By Katherine K. Chan Reporter

On Thursday, the Monetary Board lowered the target reverse repurchase rate (RRP) by 25 bps to 4.25%, the lowest in over three years or since the 3.75% in August 2022. This matched the benchmark rate set in September 2022.

Rates on the overnight deposit and lending facilities were also trimmed by 25 bps each to 3.75% and 4.75%, respectively.

The Monetary Board’s latest move met market expectations, as all 16 analysts polled by Business World anticipated a 25-bp cut.

This brought the BSP’s total reductions to 225 bps since it began its series of monetary policy easing in August 2024.

The sixth straight rate cut came after weaker-than-expected economic growth, triggered by the flood control corruption scandal that broke out last year.

“Growth has been softer than expected. Investments slowed,” BSP Governor Eli M. Remolona, Jr. said during a briefing. “We attributed this to a lack of accuracy.

But soft data on sentiment showed tentative signs of recovery.”

“Our decision today may actually help to restore confidence, boosting investment and consumption. The pace of economic recovery will depend on how quickly confidence returns,” he added.

In the fourth quarter of 2025, the Philippine economy grew by 3%, its worst performance in 16 years (excluding the pandemic period). This brought the fullyear gross domestic product (GDP) growth to a post-pandemic low of 4.4%.

The BSP had expected growth to settle at 3.8% in the final quarter of last year to bring the fullyear print to 4.6%.

In 2025, the BSP delivered a 25-bp cut at each of its meetings in April, June, August, October, and December, with the last two prompted by a clouded growth outlook as governance issues weakened consumer and business sentiment.