The Bangko Sentral ng Pilipinas (BSP) lowered key interest rates by 25 basis points as inflation remains within target. However, the central bank anticipates fewer rate cuts next year due to inflation risks.
MONETARY authorities cut key interest rates by another 25 basis points (bps) on Thursday, as expected, but flagged fewer reductions next year given inflation risks.The Bangko Sentral ng Pilipinas' (BSP) benchmark rate now stands at 5.75 percent and its overnight deposit and lending rates were also lowered to 5.25 percent and 6.25 percent, respectively.The central bank's policymaking Monetary Board began easing in August, ordering a 25-bps cut as inflation returned to the 2.0- to 4.
0-percent target, and followed this with another 25 bps in October. Following Thursday's policy meeting, BSP Governor Eli Remolona Jr. told reporters that 'the within-target inflation outlook and well-anchored inflation expectations continue to support the BSP's shift toward less restrictive monetary policy.'Upside risks remain, however, and Remolona said these would come from potential transport fares and electricity rate hikes.On the other hand, 'the impact of lower import tariffs on rice remains the main downside risk to inflation.' Monetary authorities expect inflation to remain within the 2.0- to 4.0-percent target, but the risk-adjusted forecast for this year was raised to 3.2 percent from 3.1 percent.The projection for next year was also adjusted to 3.4 percent from 3.3 percent while that for 2026 was kept at 3.7 percent.The baseline forecasts for this year and the next, meanwhile, were raised to 3.2 percent and 3.3 percent, respectively, from 3.1 percent and 3.2 percent.For 2026, the BSP expects inflation to settle at a slightly higher 3.5 percent instead of 3.4 percent.Given the higher inflation forecasts, Remolona said that cuts totaling 100 bps next year 'may be a bit much.''I think we will maintain an easing posture, but not to the extent of cutting by 100 bps. We will have to see what the data said,' he adde
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