BSP Update: BSP chooses baby steps once more  

In line with Metrobank’s expectations, the Bangko Sentral ng Pilipinas (BSP) finally resumed its rate-cut cycle after a pause in February.

With much uncertainty still around  as the tariff war drags on, concerns over dampened global economic growth are emerging. Now all eyes are on central banks, including the BSP.

Key points

• The BSP reduced its target Reverse Repurchase (RRP) rate by 25 basis points (bp) to 5.50% in its April 10 meeting.
• According to the BSP, the projected global economic slowdown amid the ongoing trade war could affect the Philippine economy. This prompted the BSP to lower its policy rate.
• The BSP revised its risk-adjusted forecasts downward to 2.3% and 3.3%, respectively, for 2025 and 2026. They also introduced the risk-adjusted forecast for 2027 at 3.2%.

Moving forward

• Metrobank maintains its forecast of a cumulative 50-bps worth of cuts this year, with an increasing possibility of an additional 25-bp cut toward the end of the year given domestic and global economic conditions.
• With the now lower interest-rate differential at 100 bps, the USD/PHP may be pressured in the near term. However, we still expect the USD/PHP to settle at 57.7 by end-2025.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)     

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ECONOMIC UPDATES   

Policy Rate Updates: BSP chooses baby steps once more

Monetary authorities have space to further support the economy

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