Metrobank expects the Bangko Sentral ng Pilipinas (BSP) to cut its key policy rate by 25 basis points to 4.25% at its Feb. 19 meeting, to support domestic growth amid slowing economic momentum.
Economic expansion slowed sharply in the fourth quarter of 2025, with gross domestic product (GDP) rising 3%, bringing full-year growth to 4.4%. The slowdown was driven by weaker household spending and subdued private investment, which remain key drivers of the Philippine economy.
“Household expenditure continues to face headwinds, and this softness in domestic demand strengthens the case for monetary easing. A timely rate cut could provide the necessary support to reinvigorate growth momentum,” Metrobank said in its market outlook published on Wealth Insights.
Inflation remains manageable despite a slight increase early this year. Consumer prices rose to 2% in January from 1.8% in December, mainly due to higher utility costs, while food inflation eased. Metrobank expects inflation to trend toward the lower end of the BSP’s 3±1% target range this year, with rice imports helping keep prices in check.
“With inflation firmly within the target range, the BSP retains room to recalibrate policy in favor of growth,” the bank said.
A 25-basis-point cut would reduce the policy rate gap between the Philippines and the United States to 50 basis points. Metrobank said currency movements are likely to depend more on business and consumer confidence than rate differentials alone.
The bank noted that further easing in April remains possible if inflation stays subdued, although sustained increases in rental and utility costs could limit additional cuts.
“Monetary policy remains data-dependent. While supporting growth is the immediate priority, the BSP will continue to balance price stability and financial market considerations in the months ahead,” Metrobank said.
As the central bank prepares to meet, market watchers will closely follow whether policymakers take steps to support a slowing economy while inflation remains contained.