Why the BSP may need to pause further monetary easing

PHILIPPINES - Report 22 Dec 2025 by Diwa Guinigundo and Wilhelmina Manalac

The BSP cut policy rates in December 2025 as inflation fell well below target, creating room for easing. However, Governor Eli Remolona has since clarified that further rate cuts are not assured and will depend on incoming data, financial stability risks, and market confidence.

While economic growth has slowed, the weakness is increasingly driven by fragile sentiment, governance concerns, and fiscal uncertainty—factors that limit the impact of additional monetary easing. In this environment, a pause in further rate cuts may better preserve credibility, manage currency risks, and keep policy space available should conditions deteriorate.

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