S&P sees BSP cutting rates by 100 bps this year

CENTRAL BANKS in the Asia-Pacific including the Bangko Sentral ng Pilipinas (BSP) are expected to cut rates further this year, S&P Global Ratings said.

- Luisa Maria Jacinta C. Jocson

“As inflation eases across the region, we expect central banks to cut rates, particularly in the slowing economies,” it said in a recent report.

S&P said it sees the Philippines' benchmark rate ending at 4.75% this year, which implies 100 basis points (bps) worth of rate cuts in 2025.

The BSP put its easing cycle on hold after it kept interest rates steady at 5.75% last month, citing global trade uncertainties.

The central bank slashed rates by a total of 75 bps in 2024.

Despite the pause, BSP Governor Eli M. Remolona, Jr. said that they are still in easing mode. He said there is space for “a few more” rate cuts this year, signaling the possibility of up to 50 bps or even 75 bps of easing if economic output is much weaker than anticipated.

S&P noted that while growth in the region is slowing, easing inflation “will allow for more rate cuts.”

“Our economics team expects most Asia-Pacific economies will see slower growth in 2025. However, the degree of change varies widely,” it said.

S&P sees Philippine growth averaging 6% this year and 6.2% in 2026. This would be within the government's 6-8% targets this year and in 2026.

The Philippines’ gross domestic product (GDP) grew by 5.6% in 2024, falling short of the government’s 6-6.5% full-year target.

The BSP earlier said it sees economic growth settling at the lower end of the government’s 6-8% targets from this year until 2026, citing elevated global commodity prices and heightened trade uncertainties.