The Bangko Sentral ng Pilipinas (BSP) is expected to cut the policy rate by 25 basis points in its policy meeting on June 19, 2025, a bank economist said over the weekend.
Bank of the Philippine Islands (BPI) lead economist Jun Neri said the expected move is backed by low headline inflation, stable core inflation and a manageable exchange rate.
“While favorable base effects may begin to fade in August, inflation is still projected to stay within the BSP’s target range. The central bank may also be inclined to support economic growth, which has fallen short of expectations as the lingering effects of inflation continue to weigh on spending,” said Neri.
Headline inflation rate softened to 1.3 percent in May, the lowest since November 2019. The Philippine Statistics Authority attributed the decline to slower price increases in housing, water, electricity, gas and other fuels.
Core inflation, which excludes volatile items, remained stable at 2.2 percent.
Neri said another rate cut is possible later this year, but the BSP would likely consider external factors in making its next decision.
Neri said the BSP may need to take a cautious approach, especially if US inflation pushes the Federal Reserve to raise interest rates. He said easing too much could make the Philippine economy vulnerable to sharp rate hikes in the U.S.
Geopolitical risks are also a concern. Tensions rose after Israel struck Iran’s nuclear facilities, which could drive oil prices higher. This may put pressure on the Philippine peso, said Neri.
“Considering these risks, we think there is a good chance that the BSP will stay neutral in their August meeting,” Neri said.
The BSP resumed its easing cycle in April with a 25-basis-point rate cut. The benchmark interest rate stands at 5.5 percent.
BSP Governor Eli Remolona hinted in May that at least two more rate cuts could happen this year.
