Philippines reduces rate as graft fallout continues to drag growth

Published Thu, Feb 19, 2026 · 07:19 PM

[MANILA] The Philippine central bank reduced its benchmark interest rate for a sixth straight meeting, as the fallout from a major corruption case dragged economic growth to its slowest pace in 14 years outside the pandemic.

The Bangko Sentral ng Pilipinas (BSP) reduced its target reverse-repurchase rate by a quarter of a point to 4.25 per cent on Thursday (Feb 19), as predicted by 24 of 26 economists in a Bloomberg News survey.

Two had expected the rate to remain unchanged.

The latest move brings the BSP’s cumulative cuts to 225 basis points in a lengthy easing cycle that began back in August 2024.

Policymakers are banking on lower borrowing costs to help spur consumer and business confidence, following reports of widespread graft in the government’s infrastructure projects.

The corruption scandal – involving billions of dollars in fraudulent flood-control allocations – was the main drag on economic growth last quarter. It slumped to 3 per cent, one of the weakest in South-east Asia.

BSP governor Eli Remolona signalled last week that interest-rate cuts may be nearing their end, saying there is “not a lot” more that the monetary authorities can do to support growth at this point.

The central bank has said that demand should gradually rebound when public spending and economic activity improve.

It also said that the inflation outlook continues to be benign and price expectations remain well-anchored.

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The inflation rate rose to 2 per cent in January, marking its highest in nearly a year and returning to the central bank’s target range of 2 to 4 per cent.

The BSP predicts oil and power costs driving an inflation uptrend in the first half of the year, then stabilising after. BLOOMBERG