BSP Brings Down Key Rate to 5.5%

The Bangko Sentral ng Pilipinas (BSP) resumed its monetary policy easing yesterday, cutting the benchmark interest rate by 25 basis points to 5.50 percent amid cooling inflation and risks to slower economic momentum.

- By KEISHA TA-ASAN

The latest move brings the total rate cuts to 100 basis points so far this cycle, as the BSP gradually unwinds the aggressive tightening it implemented from 2022 to 2023.

Rates on the overnight deposit and lending facilities were also lowered to five percent and six percent, respectively.

BSP Governor Eli Remolona Jr. said the more challenging external environment would dampen global gross domestic product (GDP) growth, posing a downside risk to domestic economic activity.

"On balance, the more manageable inflation outlook and the risks to growth allow for a shift toward a more accommodative monetary policy stance," Remolona said.

Headline inflation eased to 1.8 percent in March, below the BSP's two to four percent target. This brought the average inflation to 2.2 percent in the first quarter of the year.

The BSP trimmed its risk-adjusted inflation forecast to 2.3 percent from 3.5 percent for this year. It also reduced its estimate to 3.3 percent for 2026 from 3.7 percent previously. The outlook for 2027 stands at 3.2 percent.