For investment banking giant Goldman Sachs, last week’s 25-basis-point (bp) reduction in key interest rates was likely the end of the Bangko Sentral ng Pilipinas’ (BSP) easing cycle, unless the economy persists in its growth slump.

“For now, we do not expect further policy rate cuts from the BSP,” Goldman Sachs Economics Research said in a report on Feb. 19, the day the central bank cut the policy rate to 4.25 percent.

In the report obtained by Manila Bulletin, Goldman Sachs nonetheless pointed out that the BSP’s earlier statement during its prior 25-bp rate cut last December—indicating a projected nearing end to its monetary policy easing cycle—was absent from the latest forward guidance.

Instead, the BSP said it “will continue to be vigilant and guided by incoming information,” Goldman Sachs noted.

As such, Goldman Sachs cautioned that “unless investments and economic momentum recover, we see a risk of an additional rate cut.”

The investment bank cited that the BSP acknowledged that investment typically rebounds one quarter after confidence shocks, even as the central bank warned that the billion-peso flood-control infrastructure corruption scandal could dampen investment for two to three quarters, with confidence expected to recover by the second half of 2026.

The BSP projected gross domestic product (GDP) growth of 4.6 percent in 2026, slightly above 2025’s post-pandemic low of 4.4 percent, and rising to 5.9 percent in 2027, which, for Goldman Sachs, reinforces expectations for further policy easing as growth remains below five percent and the output gap stays negative.

A negative output gap happens when an economy is producing less than its full potential capacity—meaning actual economic output is below what the economy could sustainably produce without creating inflation.

Goldman Sachs also noted that the BSP raised its inflation forecasts to 3.6 percent for 2026 and 3.2 percent for 2027—still within the two- to four-percent target band—attributing the increase to temporary supply-side factors like higher electricity rates, flexible rice tariffs, and rising oil prices rather than stronger demand.