Philippine Central Bank Trims Key Rates By 25 Bps

(RTTNews) - The Philippine central bank resumed its policy easing on Thursday, by cutting the rates by a quarter-point to address the challenges posed by trade tariffs to the domestic economy.

The Monetary Board of the Bangko Sentral ng Pilipinas decided to reduce the Target Reverse Repurchase rate by 25 basis points to 5.50 percent.

The interest rates on the overnight deposit and lending facilities were accordingly reduced to 5.0 percent and 6.0 percent, respectively.

The bank had paused its policy easing in February after cutting it for three straight times.

"…the more manageable inflation outlook and the risks to growth allow for a shift toward a more accommodative monetary policy stance," the bank said today.

The bank downgraded its inflation forecast for the current year to 2.3 percent from 3.5 percent. Meanwhile, the projection for 2026 was reduced to 3.3 percent from 3.7 percent.

At the same time, the risk-adjusted inflation forecast for 2027 remained at 3.2 percent.

While inflation expectations remained within the target, the more challenging external environment could dampen global growth and pose downside risk to domestic economic activity, policymakers observed.

"Looking ahead, the BSP will continue to take a measured approach in deciding on further monetary easing," the bank added.

With inflation set to remain under control, the central bank is likely to loosen policy further over the coming months and by a bit more than most analysts expect, Capital Economics economist Joe Maher said.