Philippines resumes easing cycle with quarter-point cut

The Central Bank of the Philippines (BSP) has cut rates by 25 basis points amid moderating inflation and elevated risks to growth from uncertain global trade policies.

The BSP’s monetary board today (April 10) reduced its benchmark target reverse repurchase rate by 25bp to 5.5%. It also lowered the overnight deposit and lending rates by 25bp to 5% and 6% respectively.

“On balance, the more manageable inflation outlook and the risks to growth allow for a shift toward a more accommodative monetary policy stance,” the board said in a statement.

Annual headline inflation was 1.8% in March, down from 2.1% the previous month. Core inflation went down to 2.2% from 2.4% over the same period. The BSP targets inflation at a range of 2–4%.

The board said its “risk-adjusted” inflation forecast for 2025 had fallen to 2.3%, compared with 3.5% at its previous meeting in February. Its forecasts for 2026 and 2027 stood at 3.3% and 3.2% respectively, it added.

It noted that the external environment was “more challenging” and that this would “dampen global GDP growth and pose a downside risk to domestic economic activity”.

The Philippines had originally been subjected to 17% tariffs from the US, as part of the “reciprocal” levies announced by president Donald Trump on April 2. Trump yesterday paused the higher tariffs for most countries, including the Philippines, for 90 days, though the 10% “baseline tariff” remained for all.

The rate decision was in line with expectations, with 26 of the 28 economists polled by Bloomberg having correctly predicted the quarter-point cut. The BSP board said it would take a “measured approach” on any “further monetary easing”.

The Philippines was one of the South-east Asian countries less impacted by US tariffs, even before the pause. It relies less on exports than countries such as Cambodia and Vietnam, which had been subjected to, respectively, 49% and 46% tariffs before Trump’s reversal.

The BSP statement today did not make direct reference to the tariffs. However, Bloomberg reported that the central bank’s governor Eli Remolona, speaking at a briefing, had said he believed the Philippines was relatively well positioned because it depended less on trade than some of its regional neighbours. He said the tariffs would be “disruptive” to the Philippines but “not as disruptive” as they would be to major US trading partners.

The BSP is due to make its next interest rate decision on June 19.