BSP to pause rate cut cycle this week as it seeks clearer economic picture

THE BANGKO SENTRAL ng Pilipinas (BSP) could pause its easing cycle anew at this week’s meeting even as September inflation was below market expectations as it will likely want to see more data to assess the overall economic picture, analysts said.

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However, risks to the country’s growth outlook due to the fragile global environment could lead to a cut at the Monetary Board’s December meeting.

“We think September inflation sets the stage for a quarter-point rate cut in 4Q 2025 to 4.75%,” Aris D. Dacanay, HSBC economist for Association of Southeast Asian Nations, said in an emailed note. “We think this cut will happen in December this year, and not the upcoming meeting on Thursday.”

“Though, admittedly, the downside surprise in inflation increases the risk that the BSP frontloads its rate cut, we still think the central bank would like to see more data on growth and rice prices before deciding to continue its easing cycle,” he said, adding that further policy easing is also possible next year, depending on the inflation picture.

Philippine headline inflation accelerated to 1.7% in September from 1.5% in August, the government reported on Tuesday.

This was the fastest clip since 1.8% in March but was below the median estimate of 1.9% in a BusinessWorld poll and within the central bank’s 1.5-2.3% forecast. It also marked the seventh straight month that inflation was below the BSP’s 2-4% annual target.

For the first nine months, inflation averaged at 1.7%, matching the central bank's full-year forecast.