By Katherine K. chan, reporter
Bangko Central in Pilipinas (BSP said another rate cut this year) The current economy is uncertain amid Conditions are indicating an imminent end to its current easing cycle.
Asked if he sees another cut under the current easing cycle, BSP Governor Eli M. Remolona, Jr. said: “Even that cut is still possible. hindi paa sigurado. (it is not certain).”
On the sidelines of a BSP event on Friday, the central bank chief told reporters he would consider low inflation and slow growth to boost demand in deciding on his next policy move.
However, Mr Remolona said weaker-than-expected output in the fourth quarter of 2025 might not automatically warrant a key interest rate cut in February.
“This will help us decide whether to cut or not, but it is not the only factor,” he said, adding that inflation remains the top deciding factor for the monetary board.
BSP is on easy path from August 2024. This has reduced prime borrowing costs by a total of 200 basis points (bps), taking them to a three-year low of 4.5%.
In 2025, it made five consecutive 25-bp cuts, with the last two cuts driven by benign inflation and weak investor and consumer sentiment amid the flood control corruption scandal.
The economy shrank to a four-year low of 4% in the third quarter of last year as floods hit government spending and household consumption. As of September, Philippine GDP (GDP) growth rate was 5%.
The BSP expects GDP growth to slow to 4% in the last quarter of 2025, bringing the full-year print to 4.6%. If this is realized, the government will miss its 5.5%-6.5% target for the year.
The Monetary Board is set to conduct its first policy review on February 19 this year.
John Paolo R., a senior research fellow at the Philippine Institute for Development Studies. Rivera said the governor's change in tone means a sixth consecutive cut is now unlikely.
“Governor Aly's more cautious tone indicates that the February cut is no longer a base case and the BSP is moving toward risk management amid PHP (Philippine Peso) weakness and uncertain inflation dynamics,” he said in a Viber message. “Markets may be pricing in lower prices now or the easing cycle may end earlier.”
Mr Rivera said the peso could find some support if the monetary board decides to remain stable in its first policy review this year, but he added that economic growth could be put on hold for a while.
“The pause in the first meeting will help tame expectations and reduce forex (foreign exchange) pressure, but it also means less monetary support for growth, fiscal execution and a greater weighting on structural reforms to drive expansion,” he said.
The Philippine Statistics Authority will release the fourth quarter and full-year GDP reports on Thursday, January 29.
Meanwhile, Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said sluggish fourth-quarter growth and peso volatility would necessitate a 25-bp rate cut next month.
“Two main factors for a possible (25-bp) BSP rate cut at the next BSP rate-setting meeting on February 19, 2026: The delicate balancing act to further support economic/GDP growth, especially if the latest data… remains soft,” Mr. Ricafort said via Viber.
“(A) other important consideration would be the need to stabilize the peso exchange rate against the US dollar… (and) the expected Fed rate cut for now, as another (25-bp) BSP rate cut on February 19, 2026 would reduce the interest rate differential to the lowest (50 bps) on record,” he said.
Mr. Remolona said he was considering monetary policy steps by the U.S. Federal Reserve, but added that “this is just one of many data points.”
The Fed has cut its key policy rate by 175 bps through September 2024, bringing its key policy rate to a range of 3.5%-3.75%. it's bound to happen This year the first meeting was held on 27-28 January.
Mr Remolona also said on Friday he would defend the peso during a P60:$1 scenario depending on its movement.
Asked whether the BSP would intervene if it reached P60 against the dollar, he said: “It depends on how it gets there. Just because it is P60 doesn't mean we will defend it.”
The BSP chief said the central bank would probably stick to minimal intervention to prevent sharp fluctuations in the local currency.
“We just do what we've always done,” Mr. Remolona said. “We try to avoid sharp fluctuations in the peso.”
The palace had earlier said that President Ferdinand R. Marcos, Jr. expects the exchange rate not to reach the P60-per-dollar level.
According to Mr. Remolona, the peso will not be able to trade at P60 to the greenback anytime in the near future.
The peso fell to P59.46 against the dollar on January 15, a new low for the local unit after surpassing the previous record of P59.44 on January 14.
Based on data from the Bankers Association of the Philippines, it hit P59.09 on Friday, a gain of seven centavos from its P59.16 on Thursday.