Philippines Expected to Cut Interest Rates as Inflation Eases

The Philippine central bank is widely expected to lower borrowing costs this week as inflation continues to cool and economic growth shows signs of strain.

A Reuters survey of economists indicated that the Bangko Sentral ng Pilipinas (BSP) will likely trim its benchmark rate by 25 basis points to 5.00% at its August 28 policy meeting. All 26 analysts polled agreed on the move, reflecting a strong consensus that policymakers will press ahead with monetary easing.

Consumer price inflation slowed sharply to 0.9% in July, the weakest pace in nearly six years and well below the BSP’s 2–4% target range. At the same time, second-quarter gross domestic product expanded 5.5%, in line with the lower end of the government’s annual growth forecast but highlighting persistent challenges for domestic demand.

Most analysts believe the BSP will follow up with at least one more cut before the end of the year. Eighteen of 22 respondents expect the policy rate to fall to 4.75% by October, while a smaller group sees the potential for an even deeper reduction to 4.50%. A few, however, predict that the central bank may hold rates steady after this month’s adjustment.

The anticipated rate cut underscores the BSP’s effort to support growth while inflationary risks remain subdued. Economists note that external uncertainties—including global trade tensions and capital flows—will remain factors in determining the pace of further easing.