By Katherine K. Chan, Reporter
THE BANGKO SENTRAL ng Pilipinas (BSP) may extend its easing cycle this 12 months to offer the Philippine economy with more support as lingering uncertainty continues to check consumer and business confidence, analysts said.
“Against this backdrop of softer demand, elevated real rates, and lingering confidence issues, the door stays open for extra monetary easing,” ING Think Regional Head of Research for Asia-Pacific Deepali Bhargava said in a commentary.
This got here even after BSP Governor Eli M. Remolona, Jr. said the policy path ahead is now less certain as they deemed that monetary policy easing could also be insufficient to spice up economic growth.
At its first policy review of the 12 months, the central bank last week trimmed the important thing rate of interest by 25 basis points (bps) to an over three-year low of 4.25%.
The sixth straight cut brought its total reductions to 225 bps since it began easing in August 2024.
Nevertheless, Mr. Remolona earlier left the door open to supporting growth further through monetary policy so long as inflation stays manageable.
In 2025, Philippine economic growth slumped to a post-pandemic low of 4.4% after it posted a 3% expansion in the ultimate quarter of the 12 months, as weak confidence continued to stall investments, consumption and government spending amid the flood control mess.
This was below the BSP’s 4.6% full-year projection and led the country to miss its growth targets for a 3rd straight 12 months.
Mr. Remolona has said that they expect confidence to get well in just a few months as current data point to improving market sentiment, noting that their next policy decision will hinge on how briskly confidence can be regained.
Still, the BSP sees Philippine gross domestic product (GDP) growth settling below the federal government’s 5%-6% goal this 12 months because it slashed its projection to 4.6% from 5.4% previously.
For 2027, it expects the GDP to expand by 5.9%, also lower than its earlier estimate of 6.3%.
GROWTH CONCERNS
Continued government underspending may proceed to dampen each fiscal outlays in addition to household and business confidence, Ms. Bhargava said.
“The most recent (fourth-quarter) data show that soft government spending has develop into a more persistent drag, weighing not only on fiscal outlays but additionally on business and household confidence,” she said.
“We expect this pressure to persist at the very least through the primary half of 2026, given ongoing investigations and unresolved political uncertainty that proceed to dampen sentiment.”
Government spending has fallen for 4 consecutive months, after it declined by 9.61% 12 months on 12 months to P498.3 billion in November, latest Treasury data showed.
Ms. Bhargava also noted that real rates remain high at the same time as the central bank has eased for a sixth time in a row.
“Real rates remain elevated at around 2.25% even after today’s rate cut, with the most recent inflation print at roughly 2%,” she said. “This keeps monetary conditions tighter than what current economic momentum seems in a position to absorb.”
Maybank economists Azril Rosli and Suhaimi Ilias likewise see the BSP delivering yet one more final 25-bp cut this 12 months to assist the economy rebound following its underperformance last 12 months.
“The Philippine economy grew at its weakest pace in five years in 2025 at 4.4% (2024: 5.7%), undershooting the official national goal of 5.5-6.5% growth,” they said in a commentary. “In view of this, we still see room for one final 25-bp cut this 12 months to 4%.”
Meanwhile, Nomura Global Markets Research Chief ASEAN Economist Euben Paracuelles and Research Analyst Yiru Chen maintained their view that the BSP will bring its key policy rate further right down to 4%, especially after the central bank veered away from its “nearing the tip of the easing cycle” sentiment.
“BSP also sounded dovish by removing the road that the tip of the easing cycle is near. We reiterate our forecast that BSP will cut again by 25 bps in April,” they said in a note.
The Monetary Board is about to carry its next rate-setting meeting on April 23.