Philippines Interest Rate

The Central Bank of the Philippines lowered its benchmark interest rate by 25 basis points to 5.75% during its December 2024 policy meeting, marking the third consecutive rate cut and meeting market expectations. Recent data showed that the country's annual inflation rate rose to a three-month high of 2.5% in November 2024, up from 2.3% in the previous month and in line with market expectations. Inflation is projected to remain within the target range over the policy horizon, with a slight upward revision in the 2025 forecast to 3.4% from 3.3%, while the 2026 estimate remains steady at 3.7%. Meanwhile, domestic demand remained resilient, bolstered by easing inflation and an improving labor market. However, external challenges could weigh on growth prospects. Nevertheless, the Monetary Board emphasized its commitment to a cautious approach to monetary easing, aiming to ensure price stability while fostering sustainable economic growth and employment.

The Central Bank of the Philippines trimmed its benchmark interest rate by 25 basis points to 6% during its October 2024 policy meeting, marking the second consecutive rate cut and aligning with market expectations. BSP Governor Eli Remolona emphasized that the decision was driven by the central bank's assessment that price pressures remained manageable. Recent data showed that the country's annual inflation rate slowed sharply to 1.9% in September 2024, from 3.3% in the previous month and falling short of market expectations of 2.5%. This also marked the lowest inflation reading since May 2020. The BSP lowered its risk-adjusted inflation forecast for 2024 to 3.1% from the previous estimate of 3.3%. Conversely, the bank raised its inflation forecasts for 2025 and 2026 to 3.3% and 3.7%, up from previous estimates of 2.9% and 3.3%. This revision is mainly due to potential adjustments in electricity rates and higher minimum wages outside Metro Manila.

The Central Bank of the Philippines unexpectedly cut its benchmark interest rate by 25 bps to 6.25% during its August 2024 policy meeting, defying market expectations of holding the rate steady for the seventh consecutive period. This decision followed recent data showing that the country's economy expanded by 6.3% year-on-year in the second quarter of 2024, the fastest growth since the first quarter of 2023. Additionally, the annual inflation rate climbed to 4.4% in July 2024, the highest reading since October 2023 and compared to a three-month low of 3.7% in the previous month. Nonetheless, Governor Remolona emphasized that the inflation outlook was skewed to the downside for 2024 and 2025, prompting the rate cut. The BSP revised its inflation forecasts for 2024 and 2025 to 3.3% and 2.9%, respectively, from earlier forecasts of 3.1% for both years. The central bank also adjusted the interest rates on the overnight deposit and lending facilities to 5.75% and 6.75%, respectively.