BSP Poised for Potential Final Rate Cut as Inflation Eases
The Bangko Sentral ng Pilipinas (BSP) is widely expected to deliver a potential final 25-basis-point cut to the overnight reverse repurchase rate, lowering the policy rate from 6.00% to an estimated 5.75% as of March 2025. Analysts at Brown Brothers Harriman and local banks point to moderating inflation (headline 3.2% YoY, core 3.5%, food inflation 4.1%), resilient GDP growth (Q4 2024 at 5.8%; Q1 2025 est. 6.0%), and a negative output gap and sustainable credit growth as reasons supporting one more easing move. External factors—US Fed policy, China’s recovery, and regional central bank actions—could constrain further cuts due to capital flow and peso volatility risks. Markets may react with positive sentiment for equities (interest-sensitive sectors, property, and consumer stocks) and increased bond demand (yields adjusting downward), while the peso could face moderate depreciation pressure. Real economy effects include cheaper credit for SMEs and households, but lower deposit rates for savers; transmission to activity typically shows a 3–6 month lag. Traders should watch the Monetary Board’s forward guidance and FX reserve posture (reserves near $104bn) for signals on whether easing ends or leaves room for future moves. This decision is a key inflection point for policy normalization and market positioning in the Philippines.
Neutral
A final BSP rate cut is likely to have mixed effects on crypto markets tied to the Philippine peso and regional risk sentiment. Lower policy rates generally ease local borrowing costs and support risk assets, which can be mildly bullish for crypto exposure in the short term as liquidity and risk appetite increase. However, the cut is modest (25 bps) and framed as possibly the last in the cycle; concerns about currency depreciation and capital flow volatility limit strong bullish conviction. Historically, modest EM easing has produced short-lived crypto rallies followed by consolidation once FX pressures or global rate divergence reassert. Short-term impact: mild bullish on crypto risk appetite in regional markets and peso-denominated trading pairs; watch for increased local retail activity. Medium-to-long term: neutral — further upside depends on sustained growth, stable inflation, and an unchanged external rate environment. Traders should monitor BSP forward guidance, peso FX moves, and cross-border flows; hedging FX exposure and watching derivatives funding rates is prudent if taking directional crypto positions.