Philippine central bank cuts policy rate to 4.25%

The Bangko Sentral ng Pilipinas (BSP) on Thursday cut policy rates by 25-basis-point (bp) for a sixth straight meeting, a move seen to help the economy regain its momentum following a slump last year.

On Thursday, the Monetary Board lowered the target reverse repurchase rate (RRP) by 25 bps to 4.25%, the lowest in over three years or since the 3.75% in August 2022. It likewise matched the rate set in September 2022.

Rates on the overnight deposit and lending facilities were also trimmed by 25 bps each to 3.75% and 4.75%, respectively.

The Monetary Board’s latest move met market expectations, as all 16 analysts polled by the BusinessWorld anticipated a 25-bp cut.

This brought the BSP’s total reductions to 225 bps since it began its series of monetary policy easing in August 2024.

The sixth straight rate cut came amid a still manageable inflation outlook and weaker-than-expected economic growth, triggered by the flood control corruption scandal which broke out last year.

“Economic growth has undershot the BSP’s expectations due to weaker domestic demand,” the central bank said in a statement on Thursday. “Latest indicators point to a recovery in the second half of the year, but growth will depend largely on how quickly confidence recovers.”

In the fourth quarter of 2025, the Philippine economy grew by 3%, its worst performance in 16 years (excluding pandemic period). This brought the full-year gross domestic product (GDP) growth to a post-pandemic low of 4.4%.

In 2025, the BSP delivered a 25-bp cut at each of its meetings in April, June, August, October and December, with the last two prompted by a clouded growth outlook as governance issues weakened consumer and business sentiment. — Katherine K. Chan