BSP cuts rates by 25 basis points

The Bangko Sentral ng Pilipinas (BSP) [link] cut its benchmark interest rate by 25 basis points to 4.75% on Oct. 9, 2025, defying market expectations as policymakers moved to shore up business confidence rattled by the widening probe into alleged corruption in infrastructure projects. Only seven of 26 economists in a Bloomberg survey correctly forecast the move. BSP Governor Eli Remolona Jr. said at a briefing that “governance concerns on public infrastructure spending have weighed on business sentiment,” citing a decline in the stock market and fewer companies planning expansions. “Weaker growth means weaker demand, and lower inflation,” Remolona said, adding that the “Goldilocks rate could be lower” and that there remains “more room to reduce the policy rate” in the months ahead.

MB bottom-line: It’s frustrating to see the BSP act so coy about cutting rates despite the surprisingly low inflation data, only to have it suddenly relent in response to a political scandal. The PSE has sucked for years, but the BSP hasn’t once (to the best of my recollection) considered the performance of the stock market before as part of the justification for a rate cut. This will marginally help businesses and private individuals with financing needs, but I doubt there are any small business owners that are now going all-in on that facility expansion thanks to this one cut. Anecdotal evidence, but in my circle, banks have been very protective with their rates, and these cuts aren’t making their way down to regular people yet in a meaningful way.

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