Analysts split on BSP easing path

Analysts are divided on the Philippine central bank’s easing trajectory for the rest of 2025, as an escalating conflict in the Middle East and oil price spike clouds the inflation outlook.

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“We still see room for further policy easing to support economic momentum, and expect another rate cut of 25 basis points (bps) by the end of the year,” Moody’s Analytics economist Sarah Tan said in an e-mail.

“Policy easing will continue into 2026 as well. Monetary easing would support the domestic economy amid a complex external environment,” she added.

The Bangko Sentral ng Pilipinas (BSP) on Thursday cut the target reverse repurchase rate by 25 bps to 5.25% from 5.5% amid a moderating inflation outlook and weaker-than-expected first-quarter economic growth.

BSP Governor Eli M. Remolona, Jr. said on Friday that a rate cut in August was on the table depending on the data and a further escalation in the Middle East conflict.

“We could do another rate cut in August or we could pause and do the rate cut in October instead of August. That’s one possibility. But we’re looking at the data every day and we're going to decide in August what the next move should be,” he said in an interview with CNBC.

The Monetary Board’s remaining policy meetings this year are scheduled for Aug. 28, Oct. 9, and Dec. 11.

Deutsche Bank Research also expects the BSP to cut by 25 bps in August.

“Our baseline for one more 25-bp rate cut in August remains, as we think that annual inflation is likely to stay near the lower end of BSP’s 2-4% target barring an escalation in the Middle East conflict,” it said in a note.

Ms. Tan said the BSP’s policy outlook has turned “slightly gloomier” due to the escalating conflict in the Middle East and uncertainties arising from the Trump administration’ trade policies.