FX.co ★ Philippines Central Bank Cuts Rate by 25bps as Expected

The Central Bank of the Philippines has reduced its benchmark interest rate by 25 basis points to 5.25% at its June 2025 policy meeting, reaching the lowest point in two and a half years and aligning with market expectations. BSP Governor Eli Remolona stated that this decision is in response to a more moderate inflation outlook and emphasizes the necessity to bolster economic growth through a more accommodating policy. However, he warned of ongoing risks from geopolitical tensions and uncertainties in external policies. The annual inflation rate decreased to 1.3% in May 2025, down from 1.4% the previous month, consistent with market predictions and the lowest since November 2019. The inflation forecast for 2025 has been revised downward from 2.4% to 1.6%, indicating reduced price pressures. Conversely, projections for 2026 and 2027 have been slightly increased, moving from 3.3% to 3.4% and from 3.2% to 3.3%, respectively. Additionally, the interest rates on the BSP's overnight deposit and lending facilities have been lowered to 4.75% and 5.75%, respectively.