Philippines cuts policy rate to keep policy loose

The Philippine central bank cut its policy rate by 25 basis points Thursday and signaled it will continue its measured easing.

According to Bloomberg News, the Philippine central bank on Thursday (December 19) cut the overnight target reverse repo rate to 5.75%. This is the third consecutive rate cut by the Philippine central bank. Inflation in the Philippines is currently at target levels, but economic growth has slowed.

Asked at a press conference how much interest rates will be cut next year, Eli Remolona said: "In our discussion today, there was a view that a 100 basis point cut in 2025 might be too much, but a zero basis point cut is too little. We have to see what the data says."

The central bank cut policy rates by 25 basis points each time in August and October. Inflation in the Philippines has remained in the target range of 2% to 4% for the past four months. A slowdown in economic growth in the third quarter also gives the central bank reason to lower borrowing costs further.

The peso was little changed after the decision, remaining near a record low of 59 pesos to the dollar.

'The central bank will continue to closely monitor emerging upside risks to inflation, particularly geopolitical factors,' it said in a statement.

The Philippine government earlier this month revised its forecast for economic growth in 2024, while warning of uncertainty next year from the policies of new U.S. President Donald Trump.