BSP resumes easing cycle amid tariff-led global headwinds

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) on Thursday cut the policy rate by a quarter-point, as tame inflation gave monetary authorities enough room to resume its easing cycle and support the economy amid headwinds from US tariffs.

The decision brought the overnight borrowing rate that banks typically use as a guide when pricing loans to 5.5 percent.

The outcome was correctly predicted by all 13 economists polled by the Inquirer last week.

READ: BSP rate cuts penciled in 

Those who saw the rate cut coming had said that the more benign inflation of 1.8 percent in March would give the central bank enough space to help the economy at a time of heightened global trade uncertainties.

READ: Philippine inflation slowed to 1.8% in March, a near 5-yr low

The interest rates on the overnight deposit and lending facilities were accordingly adjusted to 5 percent and 6 percent, respectively.

The BSP said risks to the inflation outlook have eased and continued to be "broadly balanced" from 2025 to 2027.

"Upside pressures come from possible increases in transport charges, meat prices and utility rates. Meanwhile, downside risks are linked to the continuing effects of lower tariffs on rice imports and the expected impact of weaker global demand," the BSP said in its statement after the policy-making meeting of its Monetary Board.

But the BSP took note of "the more challenging external environment, which would dampen global GDP (gross domestic product) growth and pose a downside risk to domestic economic activity."

 

 

(2025/04/10-15:03)