The Philippine central bank is likely to reduce its key interest rate on June 19, according to a Reuters poll. Falling inflation gives the Bangko Sentral ng Pilipinas (BSP) more space to support the economy, which has recently shown signs of slowing.
This marks a change from the April survey, where most economists predicted that the BSP would keep rates unchanged in June.
Inflation dropped to 1.3% in May—the slowest rate in more than five years. It also fell below the BSP’s target range of 2% to 4%. Meanwhile, the country’s first-quarter economic growth came in weaker than expected, despite strong government spending.
In the June 10–17 Reuters poll, 22 out of 25 economists said they expect the BSP to cut its overnight borrowing rate by 25 basis points, bringing it down from 5.50% to 5.25%. Only three predicted that the rate would remain unchanged.
“Lower inflation gives the BSP the chance to cut rates again,” said Sarah Tan, economist at Moody’s Analytics. “The peso has also stabilized recently, which helps. More rate cuts would be important to support local economic growth, especially with global conditions still uncertain.”
Looking further ahead, 12 of 23 economists surveyed expect the BSP to lower the rate again by another 25 basis points to 5.00% by the end of the third quarter. The rest believe the rate will stay at 5.25%.
The median forecast for the end of 2024 is a total cut of 50 basis points, lowering the rate to 5.00%. However, there is no clear agreement among economists on where the rate will stand by the end of 2025.
In April, BSP Governor Eli Remolona hinted that more rate cuts were likely. But some economists warn that future decisions may depend on the actions of the U.S. Federal Reserve, which is expected to hold its own rates steady until September.
“Both lower growth and inflation in the Philippines support further rate cuts,” said Shreya Sodhani, regional economist at Barclays. “But the U.S. Fed’s decisions are also key. Since our U.S. team expects only one rate cut by the Fed this year, we believe the BSP may only ease twice more to maintain a 100 basis point gap between its rate and the Fed’s.”
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