Photo courtesy of Bangko Sentral ng Pilipinas.
Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said additional interest rate reductions may have limited impact on the country’s sluggish economic performance.
In an interview on Friday, Remolona said monetary authorities remain willing to ease policy if conditions allow, provided that inflation stays manageable and price stability is not compromised.
He stressed, however, that monetary tools alone cannot meaningfully revive growth at this stage, noting that lower borrowing costs need to be supported by stronger government spending and credible anti-corruption measures.
According to the BSP chief, economic recovery requires help from the fiscal side, as interest rate adjustments by themselves are insufficient to stimulate broader activity.
Last Thursday, the Monetary Board reduced the policy rate by 25 basis points to 4.25 percent, marking its lowest level in over three years and extending the easing cycle that began in August 2024.
The latest cut brought total reductions to 2.25 percentage points, a move widely expected by economists who had anticipated further easing.
Despite the adjustment, the central bank adopted a more guarded tone on future actions, with Remolona saying any additional rate cuts would now depend on incoming data and evolving economic conditions.
He also admitted that authorities had underestimated the economic fallout from a major corruption scandal that slowed public spending and weakened confidence, even as the BSP projected inflation to remain within the 2 to 4 percent target range over the next two years.