THE BANGKO Sentral ng Pilipinas (BSP) on December 11 reduced by another 25 basis points its target reverse repurchase (RRP) rate to 4.50 percent, the eighth for the year, as it continues to see inflation remaining manageable.
BSP Governor Eli Remolona, in a briefing, said this might be the last for their easing cycle “depending on the data.”
“It may have ended already. This maybe the last cut, but depending on what else you see, you can still consider another cut,” he said, citing inflation, domestic demand, and impact of governance issues, and global developments.
He, however, pointed out that “the cut will revive economic activity a bit at a time when painful governance issues around infrastructure investments have weakened government spending, business confidence, and domestic demand.”
This, as the policy-making Monetary Board (MB) cut the BSP’s inflation outlook for this year to 1.6 percent from 1.7 percent previously.
However, the 2026 forecast was hiked to 3.2 percent, from 3.1 percent; and the 2027 to 3 percent from 2.8 percent
Amidst these upward revisions, Remolona said inflation expectations remain firmly anchored.
Remolona also said “domestic demand is expected to rebound slowly as the full impact of monetary policy easing works its way through the economy and as the pace and quality of public spending improves” even with the impact of global trade concerns and issues on government flood control projects.
“Looking ahead, the BSP will ensure that overall policy settings remain consistent with maintaining price stability conducive to sustainable economic growth,” he said.
Monetary officials project growth next year to be around 5.3 percent but Remolona expects a recovery in the second half, partly as the government addresses governance issues.
“We reduced our projections for the first half of 2026, so we hope that there will be some recovery, and we’re hoping by 2027 we will be more or less back on target,” he said. (PNA)
