Philippine central bank chief tempers hawkish view, sees one more cut

PHILIPPINE central bank Governor Eli Remolona said monetary authorities may cut the benchmark interest rate one more time in the current easing cycle with the economic recovery likely to last longer than thought.

“If we get off the fence it’s probably another rate cut but that’s probably about it. One more rate cut,” Remolona said in an interview with Bloomberg Television’s Stephen Engle and Annabelle Droulers on Friday.

Remolona said the economy “looks worse than we thought” in the current quarter, prompting the Bangko Sentral ng Pilipinas to cut its key rate for a fifth straight meeting on Thursday. “The latest data seems to suggest recovery will be delayed by a quarter or two. We don’t see a significant recovery until second half of 2026,” he said.

The central bank cut its overnight target reverse repurchase rate by 25 basis points to 4.5 per cent, the lowest since September 2022. Remolona said on Thursday that it may be the last reduction in its easing cycle that began over a year ago, with domestic demand set to recover.

The central bank has said it expects a gradual recovery in domestic demand following previous rate cuts.

A graft scandal involving billions of dollars meant for flood control projects had curbed consumer and state spending, causing gross domestic product growth to slow sharply in the last quarter. BLOOMBERG