Ayala-led Bank of the Philippine Islands (BPI) expects the Bangko Sentral ng Pilipinas (BSP) to extend its easing cycle until the first quarter of 2026, after the widely expected two-quarter-point rate cuts by year-end, to stimulate growth as price pressures remain subdued.

“We think there’s potentially another cut in the first quarter [of 2026], which is good for the economy,” Jose Teodoro Limcaoco, BPI President and Chief Executive Officer (CEO), told reporters on the sidelines of the Manila Tech Summit on Wednesday, Aug. 27.

“It shows that the BSP has been doing its job correctly; inflation is under control. And they’re now doing this to continue to stimulate the economy. This is the right thing to do,” Limcaoco added.

To recall, consumer price increases have fallen to nearly six-year lows in recent months, with July inflation across all income households easing to 0.9 percent—the lowest since October 2019, when it was 0.6 percent.

Gross domestic product (GDP), meanwhile, expanded by 5.5 percent in the second quarter of 2025, a full percentage point slower than the 6.5 percent growth posted in the same period last year, according to the Philippine Statistics Authority (PSA).

With the policy-setting Monetary Board (MB) scheduled to meet tomorrow, Aug. 28, the banking industry appears to be anticipating a 25-basis-point (bps) policy rate cut.

“The industry seems to think that the Monetary Board will cut policy rates by 25 basis points. That seems to be the educated forecast,” Limcaoco said. Local economists likewise expect the BSP to push through with its third rate cut this year, citing subdued inflation and weaker GDP growth.

“For the full year, I think we’re expecting two cuts—maybe one tomorrow [Aug. 28], and another later on,” he added. Excluding tomorrow’s monetary policy meeting, the second half of the year still has two more—scheduled in October and December.

Limcaoco also noted that external developments, particularly in the United States (US), could influence the BSP’s easing path.

Asked when the BSP might stop cutting rates, Limcaoco admitted it is difficult to predict, saying the current outlook points to two reductions this year, with a possible third early next year, but uncertainty remains beyond the expected easing in the first quarter of 2026.

“It depends on what happens in the US, whether the US cuts aggressively. So, it’s hard to tell. What you do as a bank is you just forecast and see as far as you can, and you plan your lending and borrowing strategies based on that,” he explained.

Since the BSP began its inflation-targeted easing cycle in August last year, key borrowing costs have already been slashed by 1.25 percentage points (ppt), from 6.5 percent before the easing to 5.25 percent at present.

If realized, three more cuts by early 2026 would bring the key policy rate down to 4.5 percent.

Meanwhile, the BSP is rolling out a new format for announcing monetary policy decisions starting Aug. 28.

Under the revised format, the BSP will release its monetary policy stance statement through its website and official X account (formerly Twitter) at 2:30 p.m., 30 minutes before holding a press conference.

At 3:00 p.m., the BSP will hold a press briefing on the policy decision, which will also be livestreamed via Facebook. Previously, the announcement and briefing were conducted simultaneously.

According to the BSP, the press conference will open with Governor Eli M. Remolona Jr.’s remarks on the policy decision, followed by a media question-and-answer session.

“This is part of the BSP’s efforts to further strengthen transparency and public appreciation of monetary policy actions,” the central bank said.