Rate cut amid downbeat outlook

Citing a weaker growth outlook amid infrastructure spending issues stemming from the misuse of public funds, especially on "ghost" flood control projects, the Bangko Sentral ng Pilipinas (BSP) on Thursday, Oct. 9, decided to reduce the key interest rate by 25 basis points (bps) to 4.75 percent from five percent previously.

- DERCO ROSAL

This brought the trimmed rate back to the same level as September 2022, which was its lowest before a series of rate hikes to a peak of 6.5 percent was delivered.

BSP Governor Eli M. Remolona Jr. said in a statement that the central bank's outlook for consumer price movement remains "benign and well within the target range" of two to four percent.

This outlook has shifted from the earlier forecast of the BSP that headline inflation will average below two percent by end-2025.

"Potential electricity rate adjustments and possible increases in tariffs on rice imports could add some upward pressures. Nonetheless, the risks to the inflation outlook are limited as price pressures are expected to ease," the BSP said.

Additionally, the policy-setting Monetary Board (MB) noted that the outlook for domestic output expansion has "weakened."