On February 13, 2025, the Bangko Sentral ng Pilipinas (BSP) announced that it would keep its policy rates unchanged, a decision influenced by the prevailing global economic uncertainties. Governor Eli Remolona Jr. shared this during a press briefing at the BSP’s Manila office, emphasizing that the Monetary Board’s decision to maintain the target reverse repurchase rate at 5.75 percent was a cautious move amidst fluctuating international economic policies.
The rates for the overnight deposit and lending facilities were also held steady at 5.25 percent and 6.25 percent, respectively. Remolona noted that inflation expectations are still within the target range, with the BSP adjusting its risk-adjusted inflation forecast for 2025 to 3.5 percent, up from 3.4 percent, while keeping the 2026 forecast at 3.7 percent.
Despite the balanced risks to the inflation outlook for 2025 and 2026, Remolona highlighted potential upside pressures from the utilities sector and the impact of reduced import tariffs on rice as a significant downside risk. He also pointed out that while domestic growth prospects remain solid, the uncertainty surrounding global economic policies has significantly increased, affecting the domestic economy.
Contrary to expectations of a 25 basis points rate cut, the BSP decided to hold steady, with Remolona explaining that the central bank needs time to recalibrate its models to better account for the current global uncertainties, particularly in trade policy. He stressed the need for a cautious approach before making further reductions in the policy interest rate, awaiting more clarity on the impact of global policy uncertainty and the potential effects of actual policies.
Looking forward, the BSP plans to continue its gradual shift towards less restrictive monetary policy settings, as previous adjustments continue to influence the economy. Remolona reaffirmed the BSP’s commitment to a data-dependent approach to ensure price stability, which is crucial for sustainable economic growth and employment.