THE Bangko Sentral ng Pilipinas (BSP) is expected to deliver another quarter-point rate cut this Thursday amid an economic growth slowdown and rising inflation.
All analysts polled by The Manila Times said the central bank would continue easing to help lift the economy, which grew by just 4.4 percent last year — below the 5.5- to 6.5-percent target and slumping from 2024’s 5.7 percent.
Consumer price growth, meanwhile, ended an 11-month below-target run in January and rose to 2.0 percent from 1.8 percent a month earlier.
Key interest rates have been cut by eight times since August 2024 as inflation finally returned to the 2.0- to 4.0-percent target. Another 25-basis point reduction on Feb. 19 would bring the benchmark rate to 4.25 percent.
While higher inflation could limit the scope for further rate cuts, the analysts said the BSP would prioritize the need to support the economy.
Following the release of January inflation data earlier this month, the central bank reiterated language used during the last rate-setting meeting in December and said “any further easing is likely to be limited and guided by incoming data.”
“The Monetary Board will meet on 19 February 2026 to discuss the evolving assessment of Philippine macroeconomic prospects and their implication to monetary policy,” it added.
Union Bank of the Philippines economist Ruben Carlo Asuncion said growth concerns would outweigh the pickup in inflation.
“The rise in core inflation complicates — yet does not derail — the case for further easing,” he added.
Core inflation, which excludes volatile food and energy items, rose to 2.8 percent in January from 2.4 percent.
Asuncion stressed that economic momentum had “weakened sharply,” reinforcing the need for “additional policy support.”
Moreover, Moody’s Analytics economist Sarah Tan said last year’s growth print was “worrying because the slowdown came from within the domestic economy.”
“The Bangko Sentral ng Pilipinas will likely cut its policy rate by 25 basis points to lend support to the economy,” she said.
“Exports provided the only bright spot, but their strength proved insufficient to offset the drag from weak domestic demand,” Tan said, noting that a low-inflation environment will provide “room for monetary easing without jeopardizing price stability.”
Metrobank Research also said that “softer-than-expected fourth-quarter growth strengthens the case for a 25-basis-point rate cut.”
“The BSP balances moderating domestic demand with inflation that remains within target,” it added.
Economic growth slowed to 3.0 percent in the fourth quarter of 2025, slumping further from the 3.9 percent seen in the July-September period, as a massive flood control project scandal affected spending and sentiment.
Pantheon Macroeconomics economist Miguel Chanco also said a quarter-point rate cut would be delivered this week following the weaker-than-expected fourth-quarter results that signaled a cyclical hard landing in the Philippine context.
HSBC Global Research economist Aris Dacanay and Philippine National Bank economist Alvin Arogo also said growth and benign inflation would raise the case for another rate cut.
Dacanay earlier this month said that higher January inflation, which came as the core rate rose, had “made the path to further rate cuts rougher.”
Chinabank Research and Rizal Commercial Banking Corp. chief economist Michael Ricafort, meanwhile, said a strengthening peso could also prompt continued easing.
“The USDPHP has been trading lower in recent days, providing the BSP with additional room to pursue further rate cuts,” Chinabank Research said.
“The Philippine economy’s lackluster 4.4-percent growth in 2025 also adds to the case for further monetary easing,” it added, noting that lower interest rates could help improve business sentiment and spur demand for loans for production activities, thereby supporting the economy’s growth prospects.
The peso, which hit record lows in January as the dollar strengthened and the BSP indicated that it could keep easing while the US Federal Reserve paused, closed at its strongest level in over four months on Friday.
It touched the P57:$1 level before ending the day up 9.5 centavos at P58.02 to the dollar.