The Philippines cuts key rate again as inflation stays below target

It reduced its overnight target reverse repurchase rate by 25 bps to 5%

    • The central bank has now delivered 125 bps in rate cuts in an easing cycle that began last year.
    • The central bank has now delivered 125 bps in rate cuts in an easing cycle that began last year. PHOTO: REUTERS
    Published Thu, Aug 28, 2025 · 03:28 PM

    [MANILA] The Philippines eased monetary policy for the third consecutive meeting this year, bringing the key interest rate to its lowest in nearly three years as inflation remained well below target.

    The Bangko Sentral ng Pilipinas (BSP) reduced its overnight target reverse repurchase rate by 25 basis points (bps) to 5 per cent on Thursday (Aug 28), the lowest since November 2022. The move was expected by all 26 economists in a Bloomberg survey.

    The central bank has now delivered 125 bps in rate cuts in an easing cycle that began last year. Governor Eli Remolona earlier this month signalled there will likely be more through 2026, as policymakers look to shore up the economy’s defences against the global trade war.

    The BSP has scope to ease as inflation slowed anew in July, and with price increases widely seen to remain below the central bank’s 2 to 4 per cent goal in the coming months.

    The peso’s recent strength against the US dollar also reduces the risk of imported price pressures. The local currency is the best performer in emerging Asia against the greenback this month, gaining about 2 per cent.

    The Philippine economy regained some footing in the previous quarter on strong farm output, but uncertainty over the impact of US tariffs clouds the outlook for growth. Washington began imposing this month a 19 per cent levy on Philippine goods, on par with most of its neighbours.

    Other central banks in the region, including New Zealand and Indonesia, have also taken dovish tilts. The Federal Reserve is also expected to cut its benchmark interest rate next month. BLOOMBERG

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