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Manila Bulletin devider Business devider Banking & Finance devider Citi: BSP's next rate cut likely delayed to December

Citi: BSP's next rate cut likely delayed to December

Published Sep 9, 2025 04:10 pm
Uncertainty over price movements could delay the Bangko Sentral ng Pilipinas’ (BSP) next 25-basis-point (bps) policy rate cut to December, according to American banking giant Citi.
“Barring a significant growth shock, the immediate uncertainty on inflation could push the [monetary policy easing] timeline backward,” Citi said in a commentary published on Monday, Sept. 8.
Against this backdrop, Citi has moved its forecast of an earlier reduction from October to December. This banks on the assumption that by then the risk of inflation being higher than the BSP’s forecast will likely have eased.
Inflation quickened to 1.5 percent in August from 0.9 percent in July, which was the slowest in nearly six years. August inflation accelerated mainly due to higher prices for fish and vegetables, likely caused by weather-related supply chain disruptions, even as rice prices continued to decline.
It can be noted that August inflation came in within the BSP’s forecast range of one percent to 1.8 percent year-on-year, a level the central bank had already factored in during its August policy meeting.
For Citi, weather-driven inflation pressures are expected to be “temporary,” but overall year-on-year inflation has likely “already bottomed.” During the first eight months, inflation stood at 1.7 percent, with the recent uptick in volatile food prices expected to reverse once weather disruptions ease.
Citi, in particular, believes “there is still downside to the policy rate, which we expect to reach 4.5 percent by the first quarter of 2026, from five percent currently.”
On the gross domestic product (GDP) growth front, Citi expects the output to slow by the fourth quarter of the year.
It can be recalled that the country’s economic output expanded by an average of 5.4 percent in the first half of the year, below the downscaled full-year growth target of 5.5 to 6.5 percent.
To date, the BSP has loosened the key interest rate by a cumulative 1.5 percentage points (ppt) from 6.5 percent in August 2024—the start of its inflation-targeted monetary easing.
For this year alone, the BSP has reduced the policy rate by 75 bps across three consecutive policy meetings in April,

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