Philippines Central Bank Cuts Rate as Inflation Falls Below 3%

The Bangko Sentral ng Pilipinas cut its overnight reverse repurchase rate by 25 basis points to 5.25%, its fourth rate reduction since beginning the easing cycle in August 2025. The decision came after March inflation eased to 2.8%, comfortably within the central bank's 2-4% target range and down significantly from a peak of 8.7% in early 2023.

Governor Felipe Medalla said the disinflationary trend is well-established and that conditions support continued monetary easing, though at a measured pace. The bank maintained its 2026 inflation forecast at 3.1%, citing risks from elevated global food prices and potential oil supply disruptions related to the Iran conflict. Medalla noted that the cumulative 100 basis points of cuts since August have begun to stimulate credit growth, with bank lending expanding 9.2% year-on-year.

The Philippine Stock Exchange Index rose 1.1% on the announcement, with property developers and consumer discretionary stocks leading the advance. Ayala Land and SM Prime Holdings each gained over 2% as lower rates boost demand for mortgages and consumer credit. The peso held steady at 55.80 per dollar, supported by strong remittance inflows and improving current account dynamics.