Philippine Inflation Remains Below Target, Paving Way for BSP Rate Cut in December

Philippine inflation stayed below the Bangko Sentral ng Pilipinas’ (BSP) target range for the eighth consecutive month in October, reinforcing expectations of another rate cut to boost economic growth. Data from the Philippine Statistics Authority showed that annual inflation remained steady at 1.7% in October, unchanged from September. The figure was lower than the 1.8% median forecast in a Reuters poll and well below the BSP’s 2.0% to 4.0% target band.

The stable inflation rate was mainly driven by slower increases in food and transport costs, which offset the higher prices of utilities, clothing, and footwear. Core inflation, which excludes volatile food and energy items, also eased to 2.5% from 2.6% in the previous month.

According to Goldman Sachs Research, October’s low inflation provides room for further monetary easing. “We expect the BSP to cut policy rates by another 25 basis points at its December 2025 meeting, bringing the terminal rate to 4.50%,” the report stated. The BSP has already implemented four consecutive rate cuts this year as inflation remains manageable.

BSP Governor Eli Remolona recently hinted at another potential rate reduction during the central bank’s final policy meeting of the year, signaling possible continued easing in 2026.

The decline in food inflation was largely supported by a 17% drop in rice prices, while a temporary ban on rice imports—extended until the end of the year—helped protect local farmers.

The BSP noted that inflation risks are limited as global commodity prices stabilize, though it acknowledged weaker domestic growth partly due to governance concerns over public infrastructure spending. Economists expect the Philippine GDP to have grown 5.2% year-on-year in the third quarter, slightly below the 5.5% recorded in the previous quarter.