Analysts expect 25-bp rate cut this week

The Bangko Sentral ng Pilipinas (BSP) is widely expected to deliver another 25-basis-point (bp) rate cut this week, with economists citing subdued inflation, sluggish growth and soft domestic demand as key drivers for further easing.

- - Keisha Ta-asan

BPI lead economist Jun Neri said with November inflation remaining below the two percent target, the central bank has room to cut its policy rates further in the coming months.

"We expect a 25-bp cut in the BSP's policy meeting this week, consistent with the recent signals from the central bank," Neri said in a note.

He added that a gradual easing path could bring the policy rate down to four percent by 2026, although overly aggressive cuts may prompt abrupt reversals if inflation unexpectedly spikes.

Inflation eased to 1.5 percent in November from 1.7 percent in October, undershooting market expectations. Core inflation likewise slipped to 2.4 percent from 2.5 percent, bringing year-to-date inflation to 1.6 percent and core inflation to 2.4 percent.

Looking ahead, Neri noted that inflation may rise but should remain within manageable levels in the first half of 2026 in the absence of major supply shocks.