“The policy rate itself is at our Goldilocks rate, neither too high, not too low. I would characterize this as still dovish but slightly less so than before in terms of the forward guidance. We came to this decision after weighing many different scenarios,” BSP Governor Eli Remolona Jr. added.
IN WHAT CAN be considered a move to prop up the Philippine economy, the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) on Thursday delivered another 25 basis points (bps) reduction in interest rates.
In total, the central bank has so far reduced policy rates by 150 bps since last year.
This brings the BSP’s reverse repurchase rate to 5 percent while the interest rates on the overnight deposit and lending facilities to 4.5 percent and 5.5 percent, respectively.
BSP Governor Eli Remolona Jr. said that the inflation rate for the current year and 2026 will stay within their projects, prompting the rate reduction by the MB.
“Based on the latest data, I think this puts us at our sweet spot for both inflation and output. The projected inflation rate over the next year or so is where we wanted to be. Output is moving to where we think our capacity is,” he said.
“The policy rate itself is at our Goldilocks rate, neither too high, not too low. I would characterize this as still dovish but slightly less so than before in terms of the forward guidance. We came to this decision after weighing many different scenarios,” Remolona added.
WITHIN TARGET INFLATION RATE
The BSP sees the Philippine inflation rate settling at 1.7 percent this year, which according to Remolona is “very manageable.”
Meanwhile, the projections for 2026 is 3.3 percent and for 2027 3.4 percent.
Remolona, however, is harboring a positive view that the cumulative rate cuts the MB has made so far will help boost the country’s economic growth.
“Are the rate cuts significant enough? I think so. As you know, we don’t just move the rate and reverse ourselves. Usually it goes in the same direction and the cumulative effect of that is significant enough to strengthen output growth for example,” Remolona said.
For his part, BSP Assistant Governor Zeno Abenoja said the policy rate cuts would help in attaining the lower end of the government’s economic growth target.
“Given the cumulative policy rate cuts that we’ve had since August, we think that the target numbers could be feasible this year. The low end is about 5.5 percent , we think we could be there. The further impact of those policy actions could also be felt moving forward,” he said.
 of the Bangko Sentral ng Pilipinas (BSP){kind=link}