THE BANGKO SENTRAL ng Pilipinas (BSP) may deliver a sixth straight cut in February, despite the US Federal Reserve’s decision to face pat, amid weaker-than-expected Philippine economic growth within the fourth quarter, analysts said.
“Despite the Fed standing pat, we imagine BSP might be seeking to domestic developments (corresponding to) low inflation and disappointing GDP (gross domestic product) to make its call,” Metropolitan Bank & Trust Co. (Metrobank) Chief Economist Nicholas Antonio T. Mapa told BusinessWorld in a Viber message.
On Wednesday, the Fed held its benchmark rates regular at the three.5%-3.75% range, maintaining its total cuts since September 2024 at 175 basis points (bps).
The BSP’s key policy rate stands at an over three-year low of 4.5%, bringing its rate of interest differential with the Fed to 75 bps.
The Monetary Board has to this point lowered benchmark borrowing costs by a cumulative 200 bps because it began its easing cycle in August 2024.
BSP Governor Eli M. Remolona, Jr. said last week that the Fed’s moves are only one in all the numerous data points they’re considering of their monetary policy decision. He added that they are actually uncertain about delivering yet one more cut under the present easing cycle, even with a weak economy and benign inflation.
Philippine economic growth slumped to a five-year low of three% within the fourth quarter of 2025, bringing the full-year print to 4.4%. This was below the federal government’s 5.5%-6.5% goal for the 12 months, in addition to the BSP’s 3.8% forecast for the fourth quarter and 4.6% for your entire 12 months.
This, Mr. Mapa said, raises the chances of deeper easing by the Monetary Board, especially as inflation stays muted.
“The disappointing (fourth-quarter) print bolsters the case for added easing from BSP while inflation stays subdued,” he said. “(The) window for BSP to offer accommodation stays open in the interim with monetary authorities likely opting to frontload cuts while the inflation objective remains to be in hand.”
Metrobank sees the BSP delivering a complete of fifty bps in cuts this 12 months to bring the important thing rate of interest to 4% by yearend.
Then again, John Paolo R. Rivera, a senior research fellow on the Philippine Institute for Development Studies, said the central bank may opt to preserve easing space at its first meeting this 12 months because the peso stays “sensitive.”
“A possible move for the BSP is a pause with a bias to chop later if inflation stays benign and growth stays soft,” he told BusinessWorld via Viber. “It helps keep the Philippine peso and inflation expectations better-anchored, especially with the currency still sensitive, while preserving easing space.”
The peso marked a brand new all-time low of P59.46 against the dollar on Jan. 15.
On Thursday, the local unit lost 20.5 centavos to shut at P58.945 versus the greenback from its P58.74 finish on Wednesday, Bankers Association of the Philippines data showed.
“Matching the Fed’s stand is mostly healthier for the peso within the near term, while any further BSP cut must be framed as contingent on inflation staying inside goal and on clearer evidence that demand is weakening enough to warrant added support,” Mr. Rivera said.
The Monetary Board is about to carry its first policy review this 12 months on Feb. 19. — Katherine K. Chan