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Manila Bulletin devider Business devider Banking & Finance devider Rising expectations: Two consecutive BSP interest rate cuts in June and August

Rising expectations: Two consecutive BSP interest rate cuts in June and August

Published Jun 10, 2025 05:00 pm  |  Updated Jun 10, 2025 02:02 pm

Expectations are growing among foreign banks for the Bangko Sentral ng Pilipinas (BSP) to reduce key interest rates consecutively when its Monetary Board (MB) decides on the policy stance in June and August, with global investment banking giant Goldman Sachs joining the chorus.

"We continue to expect the BSP to cut two more times (25 basis points [bps] each) in the second quarter and third quarter of this year, bringing the policy rate to five percent in the third quarter of 2025," from 5.5 percent at present, Goldman Sachs Economics Research said in a June 5 report obtained by Manila Bulletin.

This projection is mainly due to low inflation, as the headline rate fell to a nearly six-year low of 1.3 percent in May.

The MB, the policy-making arm of the BSP, is set to review its monetary policy stance on June 19. Following the expected rate cut of at least 25 bps next week, the next policy meeting is scheduled for Aug. 28—the sole meeting in the third quarter.

The final two monetary policy meetings for 2025 will take place in the fourth quarter, on Oct. 9 and Dec. 11.

As Manila Bulletin reported earlier, Singapore-based DBS Bank Ltd. also expects the BSP to lower the key borrowing cost by 50 bps to reach the "terminal" level of five percent in the third quarter of this year.

Earlier on, Deutsche Bank Research economist Junjie Huang forecast 25 bps each of interest rate cuts at the MB's June and August policy meetings, citing BSP Governor Eli M. Remolona Jr.'s recent pronouncements of "maybe two more cuts" before the year ends.

In the case of also Singapore-based United Overseas Bank (UOB), it likewise expects the BSP to slash interest rates by 25 bps each in the second and third quarters, plus another 25-bp cut in the fourth quarter, to bring the policy rate down to 4.75 percent by year-end.

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Goldman Sachs Economics Research Bangko Sentral ng Pilipinas (BSP) interest rates inflation rate
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