BSP signals easing cycle nears end

THE Bangko Sentral ng Pilipinas (BSP) on Thursday lowered its benchmark policy rate anew by 25 basis points (bps) to 4.5% and signaled the current easing cycle is nearing its end.

- By Katherine K. Chan

The Monetary Board cut its target reverse repurchase rate for a fifth meeting in a row, bringing the rate to its lowest in over three years or since September 2022.

It likewise trimmed rates on the overnight deposit and lending facilities by 25 bps each to 4% and 5%, respectively.

This was in line with a BusinessWorld poll conducted last week where 17 out of 18 analysts anticipated a 25-bp cut at the Board's last meeting of the year.

"Depending on the data, (the easing cycle) may have ended already. This may be the last cut," BSP Governor Eli M. Remolona, Jr. said during a press briefing. “But depending on what else we see, we can still consider another cut.”

The central bank has so far lowered key borrowing costs by 200 bps since it began its easing cycle in August last year. It delivered a 25-bp cut at each of its meetings in April, June, August and October this year.

“On balance, the Monetary Board sees the monetary policy easing cycle nearing its end,” it said in a statement.

The Monetary Board’s decision to deliver a fifth straight cut came on the back of expectations that the economy will continue to weaken due to downbeat business sentiment amid the ongoing flood control controversy.

“The Monetary Board noted that the outlook for domestic economic growth has weakened further. Overall business sentiment has continued to decline on concerns about governance issues and lingering uncertainty over global trade policy,” it said.

"Nevertheless, domestic demand is expected to rebound slowly as the full impact of monetary policy easing works its way through the economy and as the pace and quality of public spending improves."