BSP Cuts Interest Rates to Support Economic Growth

The Bangko Sentral ng Pilipinas (BSP) has resumed its monetary easing cycle, lowering its benchmark interest rate to cushion the Philippine economy against rising global risks.

BSP cuts rates to boost growth amid global economic uncertainty

Policy Rate Cut to 5.50%

On April 10, the BSP reduced its key policy rate by 25 basis points, bringing it down to 5.50%. The move, widely anticipated by economists, is aimed at fostering economic growth amid concerns over global headwinds, particularly the possible impact of U.S. trade measures.

A Reuters survey showed that 20 out of 23 economists expected the rate cut, following signs of easing inflation.

Inflation Hits a Five-Year Low

The rate decision came shortly after data revealed that inflation slowed to 1.8% in March — the lowest level in nearly five years. This downward trend in consumer prices provided the BSP with more flexibility to support the economy without risking inflationary pressures.

BSP Signals Cautious Easing Ahead

BSP Governor Eli Remolona cited a “more challenging external environment” as a key risk to both global and domestic growth. He explained that the current inflation outlook and slowing growth momentum justify a shift toward a more accommodative monetary policy stance.

“Looking ahead, the BSP will continue to take a measured approach in deciding on further monetary easing,” he said in a press briefing.

Global Trade Tensions Still Loom

Although the Philippines has been relatively less affected than some of its regional peers, it remains vulnerable to global trade disruptions — particularly potential U.S. tariffs on Philippine exports.

These uncertainties have put additional pressure on the BSP to act proactively in maintaining economic stability.

Growth Targets and Policy Outlook

The Philippine government is targeting GDP growth between 6% and 8% this year, aiming to improve on last year’s 5.7% expansion.

Before this latest move, the BSP had cut interest rates in three consecutive meetings starting in August 2024 but surprised markets by pausing in February 2025. This latest cut signals a possible return to gradual monetary easing, depending on how inflation and global conditions evolve.

Final Thoughts

The BSP’s decision to cut rates reflects its balancing act between maintaining price stability and supporting economic growth. With inflation under control and external risks rising, the central bank appears ready to adjust its stance to safeguard the country’s recovery path.