Philippines Interest Rate

The Central Bank of the Philippines reduced its benchmark interest rate by 25 bps to 5% during its August 2025 meeting, aligning with market expectations and marking the lowest level since November 2022. The annual inflation rate eased to 0.9% in July 2025 from 1.4% in the previous month, registering the lowest reading since October 2019. The central bank’s inflation forecast remains broadly stable, with projections of 1.7% for 2025, 3.3% for 2026, and 3.4% for 2027. However, potential adjustments in electricity rates and higher rice tariffs pose upside risks to the inflation outlook over the policy horizon. Meanwhile, the Board noted that domestic demand remains resilient, although external headwinds—particularly the effects of US policy shifts on global trade and investment—continue to weigh on global economic activity, moderating the outlook for the Philippine economy. The central bank’s overnight deposit and lending facility rates were also lowered to 4.5% and 5.5%, respectively.