Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. said on Tuesday a policy rate cut remains an option for the monetary board when it meets again on August 28.
“The August rate cut is on the table,” Remolona said, pointing out that the decision will depend on incoming economic data.
A possible rate cut on August 28 would mark a policy easing cycle that could bring the key rate below 5 percent by end-2025.
He said the central bank considers the current policy rate — at 5.25 percent — as close to neutral.
“We don’t want to go too much below that,” he said. “But our estimates of the Goldilocks rate are imprecise, so we have to look at all sorts of other data. If we knew what it was exactly, then we’d stop there. But we don’t know what it is exactly.”
Asked about the possibility of three rate cuts this year — including one in August — for a total of 75 bps, Remolona gave no affirmative reply, but reiterated that the monetary stance will be data-driven.
He also cited the expected 19 percent US tariff on Philippine exports as a factor that could weigh on the central bank’s outlook, especially through global spillover effects.
“Our issue is more (about) the global spillover effects than the direct effects,” he said. “We’re not a big trading economy, so that limits the impact on us.”
The BSP is assuming that second-quarter gross domestic product (GDP) growth will come in at 5.5 percent, slightly higher than the 5.4 percent recorded in the first quarter.
Remolona also downplayed concerns over the peso’s recent weakness. The local currency closed at P57.31 against the US dollar on Tuesday, down from P57.20 the previous day.
“For some people it’s weak, but it hasn’t been that bad,” he said. “We don’t have a target for the peso. We’re not concerned with the potential inflationary effects.”
Inflation has remained manageable, with the June year-to-date average at 1.8 percent, well within the BSP’s 2 to 4 percent target range.
The central bank maintains a flexible and market-determined exchange rate policy, but remains ready to intervene to ensure orderly market conditions and curb short-term volatility when necessary.
Remolona said the peso at P57 is “comfortable” and consistent with a non-interventionist stance on foreign exchange.
