Private-sector economists doubt that the widely expected 25-basis-point (bp) cut in key interest rates on Thursday, Aug. 28, will mark the end of the Bangko Sentral ng Pilipinas’ (BSP) easing cycle, pointing to the economy’s continued slowdown and the rapid decline in inflation.

“We doubt a cut on Thursday would mark the end of the BSP’s easing cycle. We expect the policy rate to end the year at 4.75 percent,” Capital Economics senior Asia economist Gareth Leather said in a commentary published last week.

Besides the think tank Capital Economics, Singapore-based DBS Bank Ltd. and Japanese financial giant MUFG Bank Ltd. have also forecast a further quarter-point reduction in key borrowing costs, citing contained inflation.

They, alongside Chinabank Research and Singapore-based United Overseas Bank (UOB), anticipate the BSP to trim the key policy rate by 25 bps on Thursday, bringing the rate down to five percent. To date, the BSP has so far slashed interest rates by a total of 1.25 percentage points (ppt).

“Beyond the cut in August, we expect one more reduction in the fourth quarter of 2025, as policymakers tap a period of soft inflation to take a more growth-supportive stance,” DBS Group Research said in a commentary.

It added that the peso has so far appreciated up against the United States (US) dollar this year, easing import costs, while stable crude prices also help keep inflation in check.

DBS noted the “firm downward trajectory” of price movements, pointing specifically to July’s below-one-percent inflation rate, “leaving a significant real rate buffer of over 400 bps.” The overnight borrowing rate stands at 5.25 percent following successive reductions since the BSP kicked off its easing cycle in August last year.

“With benign inflation and slowing growth providing room, we are also forecasting the BSP to ultimately cut rates by another 25 bps, bringing rates to 4.75 percent by end-2025,” MUFG Global Markets Research said.

“The latest downbeat inflation outturns and a moderate economic growth outlook provide additional policy space for the central bank to ease further,” said UOB economist Jasrine Loke.

“The economy could do with more support,” Leather said. “Although GDP [gross domestic product] growth held up relatively well in the first half of the year, the economy looks set to slow, with the main drags to come from tighter fiscal policy and weaker exports.”

As such Leather has projected Philippine GDP growth to clock in at 5.3 percent this year, below the government’s downscaled growth goal of 5.5 to 6.5 percent. However, the Capital Economics economist sees this rebounding strongly next year to 6.5 percent.

To recall, BSP Governor Eli M. Remolona Jr. maintained his dovish guidance in recent comments, signaling the high likelihood of further easing.

Chinabank Research said a “challenging external environment” coupled with modest GDP growth in the first six months of the year “supports the case for a more accommodative policy stance.”

“However, we also think that the BSP will likely continue to strike a cautious tone amid persisting global uncertainties,” it further said.

Data from the Philippine Statistics Authority (PSA) showed that the Philippine economy grew by 5.5 percent in the second quarter of 2025, one-ppt slower than the 6.5 percent recorded in the same period last year.

While significantly slower than last year’s pace, second-quarter growth was still faster than the first quarter’s 5.4 percent. The four-quarter-high economic expansion also matched the lower end of the government’s revised growth target of 5.5 to 6.5 percent.