The Philippine central bank decided to cut the policy rates by 25 basis points on Thursday, as economic growth undershot expectations on weaker domestic demand.
The Monetary Board of the Bangko Sentral ng Pilipinas reduced the target reverse repurchase rate by 25 basis points to 4.25 percent.
Accordingly, the interest rates on the overnight deposit and lending facilities were adjusted to 3.75 percent and 4.75 percent, respectively.
This marks the sixth consecutive meeting where the central bank has reduced rates by 25 basis points.
In January, consumer price inflation returned to the central bank’s target range of 2 percent to 4 percent for the year. Headline inflation came in at 2.0 percent in January, up from 1.8 percent in December.
Although inflation is expected to rise slightly this year due to supply-side pressures, it is likely to be temporary, the bank said.
“Nevertheless, inflation expectations remain firmly anchored, and inflation is seen to return close to the 3 percent target by 2027,” the bank said.
Policymakers observed that economic growth undershot the central bank’s expectations due to weaker domestic demand. Indicators signal a recovery in the second half of the year but growth will depend largely on how quickly confidence recovers, the board noted.
In 2025, the economy grew 4.4 percent, missing government’s growth projection of 5.5 percent to 6.5 percent. The government expects 5-6 percent GDP growth this year.
“The BSP will ensure that overall policy settings remain in line with our pursuit of price stability conducive to sustainable growth and employment,” the bank said in a statement.
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