DBS Group Research’s Radhika Rao highlights that the Bangkok Sentral ng Pilipinas cut its policy rate by 25 basis points to 4.25%, citing a weaker-than-expected economic recovery, lower confidence and delayed government spending. Official growth forecasts for 2026-27 have been lowered, inflation projections have increased, and DBS continues to expect another 25 basis point cut as the BSP leaves the door open to further monetary easing.
BSP cuts amid cautious forward forecast
“The BSP cut its key interest rate by 25 basis points, accompanied by cautious guidance in light of a weaker-than-expected economic recovery, as well as weaker confidence indicators and delays in government spending due to graft-related uncertainties.”
“Official growth forecasts have been lowered to 4.6% for 2026 and 5.9% in 2027 (vs. 5.4% and 6.3% previously).”
“Inflation projections for 2026 were raised to 3.6% from 3.2% previously, maintaining them at close to 3% in 2027.”
“Yesterday’s guidance was more tentative, meaning the door may be open to further monetary easing if recovery momentum remains weak (we expect another 25 basis point cut).”
“To complement the accommodative policy, the BSP this month lowered reserve requirement rates for a number of bank-issued instruments, freeing up liquidity in the domestic banking system.”
(This article was created with the lend a hand of an artificial intelligence tool and has been reviewed by an editor.)
