MANILA — The Bangko Sentral ng Pilipinas (BSP) reduced its key interest rates by 25 basis points, lowering the reverse repurchase target rate to 4.25% from 4.50% set during its December 2025 meeting.

Following the adjustment, rates for the overnight deposit and lending facilities are now 3.75% and 4.75%, respectively.

The Monetary Board cited weaker-than-expected domestic economic growth as the reason for the move, noting that softened demand has weighed on overall performance.

“The Monetary Board will continue to be vigilant and guided by incoming information, specifically data on inflation. The BSP will ensure that overall policy settings remain in line with our pursuit of price stability conducive to sustainable growth and employment,” the central bank said in a statement.

The BSP expects economic recovery in the second half of the year but emphasized that the pace of the rebound depends largely on the restoration of market confidence.

Despite upward revisions to 2026 forecasts due to supply-side pressures, the central bank considers these factors temporary and said long-term inflation expectations remain firmly anchored.

“Long-term inflation expectations remain firmly anchored, with the bank projecting a return to the 3 percent target by 2027,” the BSP added.