BSP Lowers Key Rate to 5.25%

The Bangko Sentral ng Pilipinas (BSP) has lowered interest rates by 25 basis points as inflation outlook softened while global economic headwinds weighed on growth prospects.

- By KEISHA TA-ASAN

In a press conference following its third policy review this year, the Monetary Board opted to lower the target reverse repurchase rate to 5.25 percent from 5.50 percent previously.

Likewise, the overnight deposit and lending rates were reduced at 4.75 percent and 5.75 percent, respectively. The central bank has delivered a total of 125 bps rate cuts since August 2024.

"On balance, the Monetary Board sees the need for a more accommodative monetary policy stance," BSP Governor Eli Remolona Jr. said.

He said the decision came amid a decline in the BSP's inflation outlook.

The central bank now expects inflation to average just 1.6 percent this year, significantly lower than the previous forecast of 2.4 percent.

However, inflation forecasts for 2026 and 2027 were slightly revised upward to 3.4 percent and 3.3 percent, respectively.

"The Monetary Board also noted indications of deceleration in global economic activity, driven primarily by uncertainty over US trade policy and the conflict in the Middle East," Remolona said.