Philippine central bank cuts policy rate, signals easing cycle nearing an end
A security guard stands beside a logo of the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) posted at the main gate in Manila, Philippines, on Apr 28, 2016. (Photo: REUTERS/Romeo Ranoco)
MANILA, Dec 11 : The Philippine central bank cut its benchmark policy rate for the fifth straight meeting on Thursday to bolster growth, signalling its easing cycle is nearing an end, with any further moves to be limited and dependent on data.
The Bangko Sentral ng Pilipinas lowered its benchmark rate by 25 basis points to a three-year low of 4.5 per cent, in line with expectations from all but one of 27 economists in a Reuters poll.
The rate cut, which had been flagged by central bank Governor Eli Remolona, comes as a corruption scandal tied to infrastructure projects clouds the Southeast Asian country's growth outlook.
The controversy has implicated public works officials, senators, and congressmen, sparking nationwide protests and constraining infrastructure spending.
"The cut will revive economic activity a bit at a time when painful governance issues around infrastructure investments have weakened government spending, business confidence and domestic demand," Remolona told a press conference.
He added the move would not address the scandal but it could "compensate" for its impact on investor sentiment.
Remolona said that growth concerns now outweigh price risks, with inflation subdued.
Inflation has averaged 1.6 per cent in 2025, below the central bank's 2 per cent-4 per cent target range for the year. It is forecast to reach 3.2 per cent in 2026 before easing to 3.0 per cent in 2027.
"The economy is certainly in need of some support," Capital Economics said in a research note. "We are still expecting two further 25 bps cuts" for 2026, it said.
The central bank has eased rates by a cumulative 200 basis points in its current cycle, with Remolona expressing confidence that the accommodative policy stance will support economic recovery next year.
Remolona has said growth this year was likely to have slowed to between 4 per cent and 5 per cent, below the government's 5.5 per cent to 6.5 per cent target, and slower than the previous year's 5.6 per cent expansion.
