The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) on Thursday reduced its key interest rates by 25 basis points amid the declining inflation.
The BSP cut the overnight borrowing rate to 5.50 percent. The interest rates on the overnight deposit and lending facilities were also adjusted to 5 percent and 6 percent, respectively.
It said the latest inflation forecasts had declined from the estimate made in the February policy meeting.
“The risk-adjusted inflation forecast for 2025 fell from 3.5 percent to 2.3 percent, while the forecast for 2026 declined from 3.7 percent to 3.3 percent,” it said.
Meanwhile, the BSP said the risk-adjusted inflation forecast for 2027 stands at 3.2 percent.
“Inflation expectations also remain within target,” the BSP said.
“The risks to the inflation outlook have also eased and continue to be broadly balanced from 2025 to 2027. Upside pressures come from possible increases in transport charges, meat prices, and utility rates,” it said.
Meanwhile, the BSP said the downside risks are linked to the continuing effects of lower tariffs on rice imports and the expected impact of weaker global demand.
The Monetary Board noted the more challenging external environment, which would dampen global GDP growth and pose a downside risk to domestic economic activity.
“On balance, the more manageable inflation outlook and the risks to growth allow for a shift toward a more accommodative monetary policy stance,” the BSP said.
“Looking ahead, the BSP will continue to take a measured approach in deciding on further monetary easing. The BSP will remain data-dependent in its pursuit of price stability conducive to sustainable economic growth and employment,” it said.