Philippine Central Bank Cuts Interest Rate On Slowing Inflation

(RTTNews) - The Philippine central bank lowered its policy rate for the second time this year as the outlook for inflation moderated.

The Monetary Board of the Bangko Sentral ng Pilipinas decided to reduce the policy rate by 25 basis points to 5.25 percent.

Previously, the bank had reduced the rate by a quarter-point in April. The interest rates on the overnight deposit and lending facilities were adjusted to 4.75 percent and 5.75 percent, respectively.

The inflation outlook for this year was lowered to 1.6 percent from 2.4 percent. Meanwhile, forecasts for 2026 climbed marginally to 3.4 percent from 3.3 percent and for 2027 to 3.3 percent from 3.2 percent.

In May, headline inflation softened to 1.3 percent, which was the lowest since November 2019.

The board noted that uncertainty over US trade policy and the conflict in the Middle East caused deceleration in global economic activity, which would lead to a slower growth in the domestic economy.

An increase in oil prices together with electricity rate adjustments, and higher rice tariffs, would add to inflationary pressures.

"On balance, the Monetary Board sees the need for a more accommodative monetary policy stance," the board said.