Philippine Peso: BSP easing cycle weighs on PHP – BNY

BNY forecasts that Philippines's central bank Bangko Sentral ng Pilipinas (BSP) will cut rates by 25 bps to 4.25% (Feb 19), continuing its easing cycle as growth risks dominate. The bank sees inflation as manageable within the medium-term target, with risks skewed toward at least one more cut in Q2 2026. PHP’s cyclical balance-of-payments profile heightens its need for rate support.

Further BSP cuts and PHP risks

"We expect the BSP to continue its easing cycle with a further 25bp rate cut to 4.25%."

"In our view, downside risks to economic growth outweigh near-term upside risks to inflation."

"Given lingering domestic political uncertainties and limited visibility on the timing of a growth rebound, we see risks skewed toward at least one additional rate cut in Q2 2026."

"In contrast, the BSP is expected to cut to 4.25% as growth concerns continue to weigh on the economy, though inflation is not expected to fall aggressively."

"Having an adequate real rate buffer remains essential for EM FX stabilization, and PHP – which has highly cyclical balance of payments dynamics – is more in need of rate support."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)