Department of Finance Secretary Ralph Recto said he expects the Bangko Sentral ng Pilipinas (BSP) to ease the monetary policy at its next meeting to stimulate economic growth.
“It would appear that, because inflation has been controlled in the Philippines and inflation today is something like 2.5 percent, there is room for a rate cut in our next [meeting] so we’re in an easing cycle,” Recto said in an interview with Bloomberg TV.
“It’s a high probability that we could do a rate cut also for our next meeting,” he said.
The Monetary Board is scheduled to meet on April 10, 2025.
Recto anticipates interest rate cuts of 50 to 75 basis points this year, which would boost economic growth by at least half a percentage point.
“If we could reduce it in the next two years by 150 basis points, probably even higher. Now, during the last decade, we were growing at an average of 6.4 percent when rates were roughly at about 3.4 to 3.9 percent,” Recto said.
“So, our policy rate is about 5.75 percent. So if you can get the down, plus more investments, because we passed the CREATE MORE law … then hopefully that we could grow up to 7 percent or even higher later on,” he said.
The Monetary Board, at its monetary policy meeting on Feb. 13, 2025, decided to keep the overnight borrowing rate at 5.75 percent.
The interest rates on the overnight deposit and lending facilities also remained at 5.25 percent and 6.25 percent, respectively.
Recto expressed optimism the government would achieve at least 6-percent GDP growth this year.
The Interagency Development Budget Coordination Committee (DBCC) set an annual growth target of 6 percent to 8 percent from 2025 to 2028.
“The World Bank, the IMF, and many other institutions are saying that we’re on track to 6 percent. Our macroeconomic fundamentals are very good. Unemployment is down. The middle class is growing,” Recto said.
“We’re investing more than 5 percent of GDP in infrastructure. We have elections also right now, and during elections, there’s more spending, so we’re pretty confident we hit at the very least 6 percent this year,” he said.
The Philippine economy grew by 5.6 percent in 2024, slightly higher than 5.5 percent recorded in 2023. However, the government fell short of its 6-percent to 6.5-percent growth target last year.