By Ignacio R. Bunye

The Bangko Sentral ng Pilipinas (BSP) sent a clear message on June 19: It is willing to get ahead of the curve. With its second 25-basis-point policy rate cut this year — bringing the benchmark down to 5.25 percent — the BSP continues to adopt a more dovish stance than many of its global counterparts. At a time when most central banks are treading cautiously through an uncertain economic landscape, the Philippines is charting its own course.

This decision didn’t come in a vacuum. Inflation has steadily cooled, reaching 1.3 percent in May, and the BSP’s revised forecast for 2025 is a mere 1.6 percent. With global trade cooling amid geopolitical tensions and US trade policy uncertainties, the Philippines faces mounting external headwinds. The BSP’s response? Loosen the reins before the slowdown bites too deep.

What sets this move apart is its calculated timing. While the US Federal Reserve maintains a “wait-and-see” stance and both Japan and Indonesia remain on pause, the BSP has opted to front-load its support. Norway, too, surprised markets with a rate cut — their first in five years — but the Philippines has now shaved off a cumulative 125 basis points since August 2024, placing it among the most proactive in Asia.

Critics might point to the peso’s dip to P57.45 per dollar, worrying over capital flight or imported inflation. Yet the BSP isn’t rattled. With inflation forecasts for 2026 and 2027 holding close to target at 3.4 percent and 3.3 percent, and no signs of broad-based currency instability, it sees no need for intervention — an indication of quiet confidence in the country’s external buffers.

Governor Eli Remolona’s suggestion of further rate cuts signals that the central bank is committed to cushioning domestic demand as the global engine sputters. That posture, however, must remain data-dependent. Should the inflation landscape shift, or fiscal imbalances emerge, the BSP may need to recalibrate.

Still, for now, it’s refreshing to see BSP trust its own metrics and act decisively. In an increasingly hesitant global economy, the Philippines is not just reacting. It’s choosing its own tempo — and that may prove its greatest strength.

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