Finance Secretary Ralph Recto (Photo from DOF)
Finance Secretary Ralph Recto believes the Philippines is on track for more interest rate cuts this year, thanks to cooling inflation—despite uncertainties in the global financial landscape.
In a recent informal chat with reporters, Recto said the current economic environment offers room for the Bangko Sentral ng Pilipinas (BSP) to trim policy rates further, possibly by as much as 50 basis points before the year ends.
“I think the BSP has been pretty clear—we’re looking at two more rate cuts this year,” Recto shared. “We’ve echoed that expectation early on.”
Since 2023, the BSP’s Monetary Board has already slashed policy rates by a cumulative 125 basis points, aiming to support growth amid moderating price pressures. Now, with headline inflation easing to just 1.4 percent in June and the year-to-date figure at 1.8 percent—well below the government’s target range of 2 to 4 percent—the stage appears set for further easing.
“Looking at the latest data, inflation seems to be heading in the right direction,” Recto said, expressing cautious optimism that monetary policy can remain supportive without risking price instability.
Even as global markets brace for the US Federal Reserve to maintain its higher-for-longer stance due to sticky inflation, Recto said the Philippines doesn’t necessarily have to follow suit.
“Sure, the Fed might hold rates, and Trump’s even talking about wanting cuts there. But we’re focused on our own inflation numbers—and those are looking good,” he noted.
While he acknowledged that international developments could affect the BSP’s next moves, Recto remains confident the country has enough space for at least one, if not two, rate reductions this year.
“It all depends on what happens globally, especially in the US. But as things stand today, I’d say two more cuts are still on the table.”