2025.10.0906:41:48UTC+00Philippine Central Bank Cuts Rate in Surprise Move

In its October 2025 meeting, the Central Bank of the Philippines reduced its benchmark interest rate by 25 basis points, bringing it down to 4.75%. This decision defied market predictions, which anticipated the rate would remain steady at 5%. The adjustment marks the lowest rate since October 2022. The central bank justified the decision by pointing to a favorable inflation outlook, with price growth comfortably within the official target range and inflation expectations firmly anchored. However, the potential for future upward pressure on prices remains due to possible adjustments in electricity rates and anticipated tariff hikes on rice imports. The Monetary Board also expressed concerns over a weakening domestic growth outlook, partly attributed to diminished business sentiment as a result of governance issues and challenges in implementing public infrastructure projects. Additionally, signs of subdued demand reflect ongoing uncertainties in the global environment. Correspondingly, the central bank decreased its overnight deposit and lending facility rates to 4.25% and 5.25%, respectively.