BSP Slashes Interest Rate Again to 4.25% as Flood Control Scandal Tanks Consumer Confidence
The Bangko Sentral ng Pilipinas cut its benchmark interest rate by another 25 basis points on Thursday, February 19, bringing it down to 4.25% — the ninth rate cut since the central bank started easing in August 2024. BSP Governor Eli Remolona Jr. said the move was meant to help restore confidence in an economy still reeling from the massive flood control projects scandal.
"Our decision today may actually help to restore confidence, boosting investment and consumption. The pace of economic recovery will depend on how quickly confidence returns," Remolona said. The Philippines missed its GDP growth target for the third consecutive year in 2025, expanding just 4.4% amid a sharp contraction in government infrastructure spending.
Remolona admitted na mas malaki pala ang impact ng consumer and investor confidence sa economy kaysa sa initial estimates nila. When the flood control corruption scandal broke, they recalibrated their models, but even that adjustment wasn't enough to predict what happened in Q4 2025.
Lower interest rates mean cheaper borrowing costs for businesses and consumers alike, which should encourage spending and investment. The BSP is projecting a modest rebound to 4.6% GDP growth in 2026, but even that number depends heavily on whether confidence bounces back in the second half of the year.
The central bank's monetary policy outlook is now "less certain" than ever, Remolona admitted, with future rate decisions hinging entirely on how fast Filipinos regain trust in the economy. For now, inflation remains manageable — the one bright spot in an otherwise challenging economic picture.
Source: Rappler
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