While private-sector economists anticipate one last monetary policy easing before 2025 comes to a close, in order to safeguard economic growth next year, they do not think the Bangko Sentral ng Pilipinas (BSP) will reduce the key borrowing costs on Thursday, Oct. 9.

Singapore-based United Overseas Bank (UOB) said the price pressures and the underperforming gross domestic product (GDP) growth reinforce a need for another adjustment in the lending rate, but it does not see it as ideal this week.

“External headwinds continue to pose downside risks to the nation’s economic growth heading into 2026,” UOB Global Economics & Markets Research said in an Oct. 3 commentary. It also expects consumer price hikes to move faster in the coming months, but at a rate that remains within the central bank’s medium-term target of two to four percent.

UOB economist Jasrine Loke noted that this backdrop “reinforces the case for one final 25-bp [basis point] rate cut in the fourth quarter of 2025 to 4.75 percent to further safeguard the country’s growth momentum in 2026.”

To date, the policy-setting Monetary Board (MB) has reduced the key lending rate by 150 basis points to five percent from 6.5 percent, following the easing cycle that began in August last year.

If the BSP does not proceed with further loosening this week, Loke said it “will allow BSP to assess the effects of past monetary policy adjustments on the domestic economy while monitoring external developments before resuming its rate cut again in December.”

Concurring with Loke’s forecast are Singapore-based DBS Bank, Dutch financial giant ING, and Japanese financial giant MUFG Bank Ltd.

MUFG, which expects an unchanged rate at the upcoming policy meeting, notes that the BSP has recently been less dovish in its tone, particularly as the Philippine peso has weakened. This suggests a pause in easing as BSP monitors inflation and external vulnerabilities.”

Headline inflation hit a five-month high in August at 1.5 percent, but it remained tame, clocking in below the government’s goal of two- to four-percent annual price increases deemed manageable and conducive to economic growth.

To recall, the peso “was weaker against the US [United States] dollar in September” as it depreciated to the ₱58:$1 level during the month. The local currency ended September at ₱58.171 from ₱57.12 at end-August.

But for MUFG, the peso could gradually gain footing against the greenback over time, with it seen to appreciate to the ₱56:$1 level by the third quarter of 2026.

DBS anticipates growth “to hold up and inflation forecasts adjusted higher but within targets,” which would allow the economy to come close to a goldilocks state—neither too high to stifle growth nor too low to stoke inflation.

As such, DBS expects the benchmark rate to be held unchanged on Oct. 9. However, it is looking forward to “the possibility of one last rate cut in this cycle in December, following the US Fed’s [Federal Reserve] rate reductions.”

It particularly expects the Fed to deliver three rate reductions in 2025—including the one in September—and one more in 2026.

For Deepali Bhargava, regional head of research at ING Asia-Pacific, the central bank’s decision this week “will be challenging amid risks of rising food inflation over the next few months due to the impact of typhoons on the food supply.”

“Moreover, the recent depreciation in the Philippine peso against the US dollar is likely to have the BSP treading even more carefully,” Bhargava added.

Meanwhile, British think tank Capital Economics and Reyes Tacandong & Co. Senior Adviser Jonathan Ravelas expect the BSP to continue easing by 25 bps, citing weak price pressures and the need to bolster the economy.

“The economy could do with more support. While GDP growth has held up relatively well so far this year, the economy faces headwinds from tighter fiscal policy and weaker exports,” Capital Economics said. 
The Philippine economic growth averaged 5.4 percent in the first half of the year, following a modest uptick to 5.5 percent in the second quarter. Still, this fell short of the downscaled full-year growth target of 5.5 to 6.5 percent.