BSP Preview: The case builds for rate cuts
BSP is expected to cut interest rates by 25 basis points at its April meeting.

After pausing on rate cuts in February, Philippine monetary authorities are now seen to continue reductions in April.
The Bangko Sentral ng Pilipinas (BSP) moved the rate-setting meeting by a week to April 10, a move seen as giving policymakers more room to examine price data.
Now with inflation hitting a near five-year low, the case for a policy rate cut builds.
Inflation plummets
Consumer price rise was 1.8% in March, the slowest pace since May 2020. That brings the year-to-date inflation average to 2.2%, within the lower bound of the BSP’s target 2-4% target.
Despite the potential impact of US President Donald Trump’s sweeping tariffs – which now includes a 17% blanket levy on Philippine exports to the US, the current pace of inflation still leaves enough buffer against any potential price spikes.
Before the release of the latest price data, monetary authorities including BSP Governor Eli Remolona and Finance Secretary Ralph Recto signaled a policy rate cut this month, likely part of at least half-a-point worth of reductions for 2025.
Bleak global outlook
Trump’s tariffs risk all-out trade war between the US and the rest of the world, fueling concerns over global economic slowdown and heightened inflation.
Even before the blanket tariff announcement, the BSP shifted its forecast to a deficit from a surplus for the Philippines’ payments position on expectations of weak exports and more expensive imports.
The bleak global backdrop adds a case for policymakers to lower borrowing costs to help cushion the economy against external shocks.
Our call
Metrobank forecasts that the BSP will deliver a 25 basis-point rate cut at the April 10 meeting.
The current inflation outlook and moderating economic growth momentum suggest that now is a suitable time for the BSP to proceed with rate reductions to cushion the impact of tariff wars. Meanwhile, the peso has also been less volatile, suggesting that the financial markets could absorb a narrower interest-rate differential of 100 bps with the US.
(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)
MARIAN MONETTE FLORENDO is a Research Officer of the Research and Market Strategy Department, Institutional Investors Coverage Division, Financial Markets Sector, at Metrobank. Her academic background is in Mathematics and Economics. She loves solving puzzles and watching mystery movies.