Goldman, Citi flag more BSP rate cuts

Despite pronouncements from the Bangko Sentral ng Pilipinas (BSP) indicating a forthcoming end to its monetary policy easing cycle, sluggish economic growth remains a risk that could entail more interest rate cuts next year, according to investment banking giant Goldman Sachs.

- BY BEN ARNOLD DE VERA

In a Dec. 11 report obtained by Manila Bulletin, Goldman Sachs Economics Research said it is keeping its forecast of another 25-basis-point (bp) rate cut in the first quarter of 2026, lowering the policy rate to 4.25 percent on the back of a "weaker domestic growth outlook, and our more dovish US Fed [United States Federal Reserve] outlook than market pricing."

"We see risks of further easing in 2026, if growth continues to remain muted," Goldman Sachs said, even as it noted that the BSP's forward guidance "turned less dovish" following the Monetary Board's (MB) final meeting on the policy stance for 2025 last Thursday, Dec. 11, which saw a 25-bp reduction in the key interest rate to 4.5 percent.