‘February cut on the table,’ says BSP governor Remolona

By Katherine K. Chan, Reporter

Further monetary policy easing might come as early as the Monetary Board’s first meeting of 2026 amid subdued inflation and dismal economic growth last year, the Bangko Sentral ng Pilipinas (BSP) said.

Asked about the likelihood of a February cut, BSP Governor Eli M. Remolona, Jr. said: “(It’s) on the table. Unlikely pero puwede naman (Unlikely but we could deliver it).”

Mr. Remolona said that the latest December inflation print is a “reasonably low rate” and as they see the Philippine economic growth in 2025 likely undershooting the government’s target.

“I can say that we’re very close to where we want to be in terms of policy,” he told journalists in Mandaluyong City. “There’s a chance that we may cut some more, and there’s also a chance that we may not move at all. But there’s not a lot of probability that we will raise in 2026.”

The Monetary Board ended last year with a fifth straight 25 basis-point (bp) cut at its Dec. 11 meeting, bringing the key policy rate to its lowest in over three years at 4.5%.

It has so far delivered 200 bps in total cuts since it began its easing cycle in August 2024.

Mr. Remolona said the country’s gross domestic product (GDP) may have expanded by 4.6% last year as the flood control corruption scandal continued to drag consumer and business confidence.

This falls below the government’s 5.5-6.5% target for the year and likewise lower than the Development Budget Coordination Committee’s (DBCC) latest projection of 4.8-5%.

The BSP has repeatedly said following its December meeting that further easing is now limited and would depend on economic developments in the country.

Mr. Remolona noted that more than one 25-bp reduction would only come if growth settles below 5% this year.

“If we cut two more times, medyo ibig sabihin non things are worse than we thought (that might mean that things are worse than we thought). So, that would require a bad surprise in the data,” he said.

“If growth is much slower than we anticipated. We’re saying for 2026, growth will be 5.4%. If it goes below 5%, then there’s grounds for one more cut beyond the 25 basis points,” he added.

For 2026, the central bank sees GDP growth averaging 5.4%, noting that the economy will likely remain sluggish in the first half before picking up in the second half.