Poll: BSP to cut policy rate to 4.25%

Sluggish economic growth and a still benign inflation outlook provide the Bangko Sentral ng Pilipinas (BSP) with ample room to deliver a sixth straight interest rate cut at its first policy meeting this year, analysts said.

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Based on a Business-World poll conducted last week, all 16 analysts surveyed expect the Monetary Board to reduce the target reverse repurchase rate anew by 25 basis points (bps) on Thursday, Feb. 19.

If realized, the key policy rate would fall to 4.25% from the current 4.5%, the lowest in over three years or since the 3.75% in August 2022.

It would also match the benchmark rate set in September 2022.

Since the Monetary Board began its easing cycle in August 2024, it has so far lowered borrowing costs by a total of 200 bps.

The BSP started 2025 with a pause at its February meeting before delivering five consecutive 25-bp cuts, with the last two prompted by weak sentiment amid a growth slump.

Analysts said the disappointing fourth-quarter gross domestic product (GDP) print may outweigh other deciding factors in the central bank's monetary policy review, as another round of easing is expected to help boost the economy.

"The Bangko Sentral ng Pilipinas will likely cut its policy rate by 25 basis points to 4.25% on Thursday to lend support to the economy, following a worse-than-expected fourth-quarter GDP outcome," Moody's Analytics Assistant Director and Economist Sarah Tan said in an email.

In the final quarter of 2025, the Philippine economy grew by 3%, its worst performance in 16 years (excluding pandemic period), as the flood control corruption mess continued to slow down investments and spending.

This was even weaker than the revised 3.9% expansion seen in the third quarter, or when the flood control issue began to take a toll on the economy.

The graft scandal emerged following extensive flooding across the country that uncovered numerous faulty, substandard and even nonexistent flood control projects.

Investigations later revealed that Public Works officials, lawmakers and private contractors received kickbacks from the government's infrastructure program.