The Bangko Sentral ng Pilipinas’ (BSP) Monetary Board reduced its overnight borrowing rate by 25 basis points to 4.25 percent on Thursday, marking its first interest rate cut of 2026 to address sluggish domestic demand.
The Monetary Board lowered the overnight borrowing rate to 4.25 percent during its policy meeting. Interest rates for the overnight deposit and lending facilities were also cut to 3.75 percent and 4.75 percent, respectively.
BSP said economic growth has recently trailed expectations. “Economic growth has undershot the BSP’s expectations due to weaker domestic demand. Latest indicators point to a recovery in the second half of the year, but growth will depend largely on how quickly confidence recovers,” the BSP said in a statement.
While the outlook for inflation remains manageable, the BSP slightly raised its 2026 forecasts due to temporary supply-side pressures. Despite these adjustments, inflation expectations remain anchored, with a projected return to the 3 percent target by 2027.
The BSP said it would will remain vigilant and rely on incoming data, particularly regarding inflation, to guide future moves.
It said it aims to ensure policy settings support price stability while fostering sustainable growth and employment.
 reduced its key interest rate by 25 basis points to 4.25 percent to stimulate domestic demand amid slowing economic growth.){kind=link}