More interest rate cuts expected until 2026

Japanese financial giant MUFG Bank Ltd. expects the Bangko Sentral ng Pilipinas (BSP) to lower its key interest rate to 4.25 percent by the middle of next year, as monetary authorities seek to address intensifying economic growth headwinds alongside expectations of a weaker peso.

- Ben Arnold de Vera

In its latest foreign exchange (forex) outlook report published on Nov. 3, MUFG Global Markets Research forecast that the Philippine peso will remain at the ₱58 level over the next four quarters.

The local currency is projected to end 2025 at ₱58.7 against the United States (US) dollar, before appreciating to ₱58 in the first half of 2026.

By the third quarter of next year, the peso is seen depreciating to ₱58.5 versus the greenback.

The peso weakened to ₱58.724:$1 at end-October, after falling to its record low of ₱59.13 on Oct. 25.