THE BANGKO SENTRAL ng Pilipinas (BSP) is widely expected to deliver one other 25-basis-point (bp) reduction to its key policy rate at its first meeting this 12 months, which analysts said could mark the tip of its current easing cycle.
“We expect the BSP Monetary Board to deliver a 25-bp rate cut at its Feb. 19 meeting, consistent with recent guidance that some limited policy space for relieving stays,” Maybank Investment Banking Group economist Azril Rosli said in an e-mail. “Nonetheless, the scope for larger moves may not be the case.”
Mr. Rosli said a 50-bp cut will likely be off the table considering the inflation uptick in January even after the Philippine economy slumped in the ultimate quarter of last 12 months.
“On one hand, the inflation trajectory is becoming less benign, with each headline and core measures moving higher, narrowing the room for further easing and making aggressive cuts hard to justify, especially as firmer core inflation points to underlying price pressures,” he said.
In January, headline inflation heated as much as its fastest in nearly a 12 months at 2% from 1.8% in December but cooled from 2.9% a 12 months ago.
This marked the primary time in a couple of 12 months that inflation hit the central bank’s 2%-4% goal.
Meanwhile, core inflation, which excludes volatile prices of food and fuel, likewise quickened to 2.8% last month, from 2.4% in December and a couple of.6% within the previous 12 months.
Mr. Rosli noted that this is able to bring the Monetary Board closer to the tip of its easing path.
“(T)here’s a better probability that February’s move may very well be a final or near-final calibration, somewhat than the beginning of a renewed easing phase,” he said.
A BusinessWorld poll conducted last week showed all 16 analysts surveyed expect the Monetary Board to cut back the goal reverse repurchase rate anew by 25 bps to 4.25% on Feb. 19.
DBS Chief Economist Taimur Baig and Senior Economist Radhika Rao said the recent dismal growth will cement a sixth straight rate cut on Thursday.
“The dovish stance for February is prone to be further cemented by disappointing growth numbers for (the fourth quarter of 2025), where headline slowed to three% 12 months on 12 months, at a five-year low,” they said in a report.
Philippine gross domestic product (GDP) expanded by 3% within the fourth quarter, dragging full-year growth to a post-pandemic low of 4.4% in 2025, as governance concerns amid the flood control controversy dampened investments and spending.
Metropolitan Bank & Trust Co. Chief Economist Nicholas Antonio T. Mapa said a rate cut on Thursday would give the economy its much needed boost sooner, considering the delayed impact of monetary policy easing.
“A drained consumer alongside the shortage of personal sector investment have been weighing on growth ever because the (COVID-19) reopening,” Mr. Mapa said in a Viber message. “Each could use the shot within the arm provided by the air cover of a BSP cut.”
“A reignited private sector investment push stays the missing link to unlocking latest sources of growth, outside mainstay household spending,” he added.
Household consumption growth slowed to three.8% within the fourth quarter from 4.7% a 12 months ago and 4.1% within the third quarter.
Meanwhile, investments fell by 10.9%, a reversal from the 5.5% rise in the identical period in 2024 and steeper than the -2.8% posted within the third quarter.
Hannah Liu, research analyst at Nomura Global Markets Research, also expects 1 / 4 point cut on Thursday, although she sees a 35% probability for the BSP to carry regular.
The Monetary Board will even likely maintain its less dovish stance after it delivers a 25-bp cut on Thursday, she noted, adding that upcoming economic data will guide the BSP’s policy path going forward.
“We expect the BSP’s monetary board meeting to be much like the one in December, when it turned less dovish and emphasized that the tip of its easing cycle is near, after the substantial rate cuts delivered to date,” Ms. Liu said in a report.
“Still, BSP will, in our view, proceed to point data dependence, given the high uncertainty of the extent of the drag on the economy from the corruption scandal and spillover effects,” she added.
Since August 2024, the central bank has to date lowered borrowing costs by a cumulative 200 bps, which brought the benchmark rate all the way down to 4.5% from 6.5%.
BSP Governor Eli M. Remolona, Jr. earlier left the door open for further easing to assist spur domestic demand.
Nonetheless, he noted that current economic data can have narrowed their easing space, with business confidence beginning to get better.
For Mr. Rosli, one other rate cut after February will only be possible if inflation eases and growth stays sluggish.
“Beyond February, additional cuts are conditional somewhat than assured,” he said. “A final 25-bp cut later in 2026 stays possible provided that inflation momentum clearly eases and growth continues to underperform.”
The Monetary Board can have six policy meetings this 12 months, with the primary one to be held on Feb. 19. The remaining are scheduled for April 23, June 18, Aug. 27, Oct. 22 and Dec. 17. — Katherine K. Chan