Monetary Board cuts key policy rates by 25 basis points anew

MANILA, Philippines — The Bangko Sentral ng Pilipinas’ monetary board has decided to further cut key interest rates by 25 basis points on Thursday, December 19, bringing down the target reverse repurchase rate 5.75%.

The central bank has delivered 75 basis points of rate cuts since August.

The adjustment also lowered the rates on the overnight deposit and lending facilities to 5.25% and 6.25%, respectively.

The central bank said it cut its rates as inflation is expected to be within the target range, with a slight upward adjustment in the risk-adjusted inflation forecast for 2025 to 3.4% from 3.3%, while the 2026 forecast remains steady at 3.7% and inflation expectations are well-anchored.

However, the balance of risks to the inflation outlook continues to lean to the upside due largely to potential upward adjustments in transport fares and electricity rates. 

Meanwhile, the impact of lower import tariffs on rice remains the main downside risk to inflation.

“On balance, the within-target inflation outlook and well-anchored inflation expectations continue to support the BSP’s shift toward less restrictive monetary policy. Nonetheless, the monetary authority will continue to closely monitor the emerging upside risks to inflation, notably geopolitical factors,” the Monetary Board’s statement read.

“Looking ahead, the Monetary Board will maintain a measured approach to monetary policy easing to ensure price stability conducive to sustainable economic growth and employment,” it added. — with reports from the STAR/Keisha Ta-asan