Even as the Philippine economy slowed sharply in the third quarter of 2025, the Bangko Sentral ng Pilipinas (BSP) will continue with its cautious approach to easing key borrowing costs.

BSP Governor Eli M. Remolona Jr. told reporters that further easing in the key lending rate is “possible” in December, the last policy meeting of the Monetary Board (MB).

Remolona said last year’s gross domestic product (GDP) expansion was overestimated due to missed investments, requiring adjustments to 2024 figures. He expects growth in the third quarter of this year to edge up from the current four percent but noted it will still remain modest.

He explained that the BSP needs to determine whether the recent economic slowdown is driven by demand or supply factors, noting that it cannot address issues stemming from the supply side.

On the foreign exchange (forex) front, Remolona said the BSP has intervened “just a little” to prevent wild swings in the United States (US) dollar-Philippine peso exchange rate.

Remolona also reiterated that the BSP is not worried about the peso hitting the ₱58:$1 level, adding that the central bank does not have a specific target for where the peso should settle.

While price movements could feel some impact, the BSP Governor argued that the recent string of typhoons would mainly affect supply. This could mean the economy may still accelerate despite downside risks from calamity-related disruptions.

Remolona also said the BSP is still fine-tuning system liquidity, following market rumors that the central bank is considering an off-cycle reserve requirement ratio (RRR) reduction amid disappointing third-quarter growth.

“We are still adjusting liquidity in the system and assessing whether it is too much or too little. If we lower the reserve requirement, liquidity will increase,” Remolona said.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael L. Ricafort said every one-percentage-point (ppt) cut in big banks’ RRR would inject roughly ₱180 billion in additional liquidity into the banking system, potentially boosting lending and investments in areas like fixed income and bonds.

To recall, the ratio for big banks was slashed by 200 basis points (bps) to five percent from seven percent in February this year. The ratio for digital banks was shaved by 150 bps to 2.5 percent from four percent, and for thrift banks, it was reduced by 100 bps, bringing it down to zero.