Photo credit: BSP

In its latest policy meeting, the Bangko Sentral ng Pilipinas (BSP) made the decision to lower its key policy rate by 25 basis points, bringing the Target Reverse Repurchase (RRP) Rate down to 5.25 percent. Corresponding adjustments were also made to the overnight deposit and lending rates, now set at 4.75 percent and 5.75 percent, respectively.

This move reflects a shifting economic landscape, particularly a more moderate inflation outlook. The BSP’s forecast for 2025 inflation has been revised down significantly, from 2.4 percent to 1.6 percent. Projections for 2026 and 2027 saw slight upticks but remain within the target range, with inflation expectations still considered well-anchored.

At the same time, the Monetary Board acknowledged growing headwinds from abroad. Slowing global activity—partly due to uncertainty surrounding U.S. trade policy and ongoing conflict in the Middle East—is expected to dampen Philippine growth prospects. Meanwhile, local inflation risks persist, including rising oil prices, adjustments to electricity rates, and potential changes in rice tariffs.

Taking all this into account, the Monetary Board judged that a more accommodative policy stance was appropriate. While easing rates should help support economic activity, the BSP emphasized that it remains vigilant. Emerging geopolitical risks and external uncertainties could still pose challenges to inflation control.

Looking ahead, the BSP reiterated its commitment to maintaining price stability while ensuring that monetary policy remains supportive of long-term economic growth and job creation. The central bank also stressed that it will continue evaluating the effects of its previous policy actions to guide future decisions.