Concerns over economic growth are likely to outweigh the recent peso slump in the Bangko Sentral ng Pilipinas (BSP) policy decision this Thursday, according to a think tank that anticipates another quarter-point cut in the key lending cost by year-end.

Economic think tank Moody’s Analytics, in a commentary published last Friday, projected the central bank “will likely” reduce the current 4.75 percent key policy rate by 25 basis points (bps) on Dec. 11. If implemented, the move would bring the key interest rate to 4.5 percent by the end of 2025.

“A weaker-than-expected third-quarter gross domestic product (GDP) print and a low-inflation environment should outweigh concerns about recent currency depreciation,” the firm’s analysts wrote.

Growth slowed sharply in the third quarter to four percent, marking the slowest quarterly GDP expansion in four and a half years. Meanwhile, inflation settled at a four-month low of 1.5 percent in November. Both output and the inflation rate fell below government targets.

The government is targeting GDP expansion of at least 5.5 percent and average inflation within the two percent to four percent band this year. The Cabinet-level Development Budget Coordination Committee (DBCC) is scheduled to meet this week to revisit the full-year targets.

Germany-based Deutsche Bank AG also penciled in a 25 bps reduction in the key policy rate at the Monetary Board’s (MB) final policy meeting of the year.

The bank cited the “now wider negative output gap from lower public spending and weaker sentiment, and still-high real interest rates.” A negative output gap is the difference between an economy’s growth potential and its actual performance.

Deutsche Bank analysts noted that the country’s output growth “may still be fairly weak amid lingering effects of constrained public spending,” as infrastructure spending fell 7.8 percent in October. The government had tightened spending, particularly on infrastructure, amid an ongoing probe into alleged corruption involving flood control funds.

The bank slashed its fourth-quarter growth forecast to just 4.1 percent from a previous projection of 5.4 percent, a downscaled outlook that falls significantly short of the country’s growth goal.

Such sluggish growth, the bank said, “points to a wider negative output gap and thereby elicits a policy action by the BSP.”

It also noted that the country’s real interest rate, or inflation-adjusted rate, stands at about three percent—higher than the regional average of 1.5 percent to two percent. This spread, the analysts concluded, provides the central bank with “ample room for rate cuts.”

BSP Governor Eli M. Remolona Jr. earlier said a policy easing this week is possible but “not assured,” as the lackluster growth increased the chance of a further adjustment in the key borrowing cost.