OTHER MONETARY POLICY The easing may come just before the first meeting of the Monetary Board of 2026 amid low inflation and poor economic growth last year, the Bangko Sentral ng Pilipinas (BSP) said.
Asked about the possibility of a decision in February, BSP Governor Eli M. Remolona, Jr. he said: “(There is) on the table. It will not happen pero puwede naman (but we can deliver).”
Mr. Remolona said December’s latest inflation rate of 1.8% was “reasonably low,” as it rose from 1.5% in November. Year-on-year, it is down from 2.9% in December 2024.
Philippine economic growth in 2025 is also likely to slow below the government’s targets, he added.
“I can say that we are very close to where we want to be in terms of policy,” he told reporters in Mandaluyong City. “There are many chances that we will reduce some, and there is a chance that we will not move at all. But there are many chances that we will increase them in 2026.”
The Monetary Board ended last year with a fifth consecutive 25-basis-point (bp) rate cut at its December meeting. 11, which brought a significant policy dimension to that the lowest in three years at 4.5%.
It has so far delivered 200 bps in total cuts since it began its easing cycle in August 2024.
The central bank official said that the gross domestic product (GDP) may have grown by 4.6% last year as corruption in flood control continues to drag away the confidence of consumers and investors.
This would be below the government’s target of 5.5%-6.5% for the year and lower than the Development Budget Coordination Committee’s (DBCC) latest projection of 4.8%-5%.
“There has been a loss of confidence among investors. So, investment has decreased. Consumption has also decreased,” said Mr. Remolona.
“If you see that your taxes do not go into the use of infrastructure, it hurts eh (that hurts)… It hurts more when you know it’s going to the wrong guys. So, that has a big effect,” he added.
In the third quarter, GDP growth fell to a four-year low of 4% amid allegations that the Ministry of Public Worksficials, legislators and private contractors have received compensation for flood control projects in an extraordinary manner.
Economists have admitted that the economy may fail to meet the government’s growth target by 2025.
Meanwhile, the BSP has repeatedly stated following its December meeting that further liberalization is now limited and will depend on the development of the country’s economy.
Mr. Remolona said they may only deliver two 25-bp cuts if growth slows to below 5% this year due to weak demand.
“If we double, I did somethingthings are worse than we thought (that might mean things are worse than we thought). So, that will require a negative surprise in the data,” said Mr. Remolona.
“If the growth is slower than we expected. We say that in 2026, the growth will be 5.4%. If it falls below 5%, there is a ground for one cut above 25 bps,” he added.
In 2026, the central bank sees GDP growth of around 5.4%, noting that the economy will remain stagnant in the first half before picking up in the second half.
“Mahaba pala ‘tong impact eh yung loss of confidence (The impact of loss of confidence may be extended)… will continue during the first half of 2026,” said Mr. Remolona, noting that the 5.4% growth is “not bad” considering the flood control scandal.
On Monday DBCC revised its growth targets for this year to 5-6% from 6-7% previous target.
Economic growth may improve to 6.2% in 2027, the BSP official said, staying close to the upper end of management’s revised target of 5.5%-6.5%.
The Monetary Board will hold its first policy meeting this year on February 19. — Katherine K. Chan
