The Bangko Sentral ng Pilipinas (BSP) issued a statement that its monetary policy easing cycle may be nearing its end, after it briefed President Marcos Jr. on the country's economic outlook.
BSP Governor Eli Remolona Jr. met with President Marcos in Malacañang on Tuesday to discuss the lowering of interest rates and the expected economic recovery. Earlier, the Monetary Board (MB) lowered the key interest rate from 4.75% to 4.5% last month. The reduction also included overnight deposits from 4.25% to 4%, and overnight lending facilities from 5.25% to 5%.
According to the BSP, economic growth is expected to remain modest in the first semester of 2026, but there will be a rebound in 2027 supported by the previous policy easing measures. In a previous press briefing, Remolona noted that growth slowed in the third quarter to 4% due to the impact of the corruption controversy, but the economy is expected to recover this year and next.
Remolona added that the BSP hopes that government infrastructure spending will return to normal levels and become more effective, along with improving investor and consumer sentiment. He also indicated that any further easing may be limited, while continuing to assess the impact of rate cuts and other economic developments including possible supply shocks.
On the inflation aspect, the BSP chief said it is “broadly benign” and that the expectations of businesses, households, and economists remain well-anchored. Inflation is expected to be low this year but return to target in 2026 and 2027. The World Bank also sees the Philippine economy recovering in the next two years, supported by private consumption, employment, and monetary easing.
