MANILA – The Philippine central bank expects to maintain interest rates at present levels as inflation picked up last month and growth likely slowed in 2025, its governor said on Tuesday.
Inflation accelerated to 1.8% in December, its fastest pace in nine months, due to rising food and clothing prices, the statistics agency said. Consumer prices were up 1.5% in November.
On a monthly basis, inflation picked up to 0.9% in December, the sharpest increase since September 2023. However, average full-year 2025 inflation stood at 1.7%, the slowest since 2016.
Bangko Sentral ng Pilipinas Governor Eli Remolona said Philippine economic growth may have slowed to 4.6% in 2025, from the previous year’s 5.7% expansion and below the government’s 5.5% to 6.5% target.
“Given the data we have right now, we are not going to cut,” Remolona told a roundtable of a Manila-based club, while anticipating a recovery in growth this year and next.
“I can say we are very close to where we want to be in terms of policy rate. There’s a chance we may cut some more or not move at all,” he said, though he added that a growth dip below 5% could justify further easing.
The government has slashed its growth target for the year to 5% to 6% and 5.5% to 6.5% in 2027, citing risks from global economic headwinds.
The BSP cut its policy rate for five straight meetings last year, bringing its benchmark rate to a three-year low of 4.5%. The target reverse repurchase rate has been slashed a cumulative 200 basis points since August 2024, an easing cycle which is nearing its end, the central bank said.
“Any further easing is likely to be limited and guided by incoming data,” the central bank said in a separate statement.
The BSP meets for the first time this year to review policy on February 19.
(Reporting by Mikhail Flores and Karen Lema; Editing by John Mair and Jacqueline Wong)
