Mactan, Cebu — Amid Trump's comeback, the Bangko Sentral ng Pilipinas (BSP) is considering a 25 basis points (bps) reduction in borrowing costs, either in December or at the next Monetary Board (MB) meeting, as the central bank continues its easing cycle, according to an official.

During the Systematic Risk Dialogue on Tuesday, Nov. 19, BSP Governor Eli M. Remolona Jr. told reporters that a policy rate cut is possible at the upcoming MB meeting, although it would be implemented cautiously.

“Either we cut in December or we cut in the next meeting, but it will be done gradually,” Remolona said.

He also said that the move will proceed in increments of 25 bps, stating, "there’s no bad news yet, anyway."

If the central bank continues with the rate cuts, the key policy rate for the year will be set at 5.75 percent. This would mark the third reduction, resulting in a total decrease of 75 bps.

Regarding 2025, Remolona clarified that a reduction of 100 bps is not fixed and may be adjusted either higher or lower.

“It’s not exact. It could be more or less, but it’s in the ballpark” or within reasonable or expected limits, the governor said.

This could be the right move, despite the third-quarter GDP growth for 2024 being lower than expected at 5.2 percent.

“It’s [the third quarter growth] just an aberration. I think it will recover in Q4,” Remolona said. This is resonant with the expectations of the private economists monitoring the Philippines.

On another point, the governor said that the next development to watch is the November inflation figure, which, according to the central bank’s expectations “it’s still within the target band for November.”  

When asked about the strength of the peso against the greenback, Remolona said it remains stable and below P59.

“We don't worry too much about whether the peso depreciates or appreciates; we’re more concerned about the passthrough effect,” Remolana stated, noting that presently, the situation appears to be stable.

The BSP is carrying out a “little” intervention in the foreign exchange market “just to prevent it from spiking too much.”

“We leave it to the guys in the financial markets area. But if it depreciates very sharply, then we walk,” Remolona assured.  

“If the movements are not sharp, they don’t pose an inflationary risk. However, sharp and sustained fluctuations can lead to inflationary pressures. The central bank does not intervene in daily market movements but closely monitors exchange rate swings over a few months,” the governor further said.

He explained that typically, such news is anticipated the night before. These kinds of news put pressure on the peso, causing it to either strengthen or weaken. The expectations are generally accurate, but sometimes they are off, and the movements are strong, that's when the central bank tries to intervene, said Remolona.