Philippines: BSP easing path stays open – DBS

DBS Group Research’s Radhika Rao highlights that Bangko Sentral ng Pilipinas cut its policy rate by 25bps to 4.25%, citing weaker-than-expected recovery, softer confidence and delayed government spending. Official growth forecasts for 2026–27 were lowered, inflation projections nudged higher, and DBS still expects one more 25bps cut as BSP keeps the door open to further easing.

BSP cuts with cautious forward guidance

"The BSP lowered policy rate by 25bps, accompanied by a cautious guidance in light of weaker-than expected recovery, besides softer confidence indices, and delay in government spending on graft-led uncertainty."

"Official growth forecasts were cut to 4.6% for 2026 and 5.9% in 2027 (vs 5.4% and 6.3% earlier)."

"Inflation projections were raised to 3.6% for 2026 from 3.2% previously, while keeping it close to 3% in 2027."

"Yesterday’s guidance was more uncertain, which implies that the door might be open for further easing if the recovery momentum stays weak (we expect one more 25bps cut)."

"To complement an easing policy stance, the BSP lowered reserve requirement rates on a range of bank-issued instruments this month, freeing up liquidity for the domestic banking system."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)