Philippine central bank governor: We watch the peso closely, but short-term volatility is not a concern

Philippine central bank governor: We watch the peso closely, but short-term volatility is not a concern

Philippine Central Bank Governor: Peso Volatility Monitored, but Short-Term Decline Not a Priority

The Bangko Sentral ng Pilipinas (BSP) reduced its key interest rate by 25 basis points on February 19, 2026, marking the sixth consecutive cut in its easing cycle to 4.25%. The move aims to stimulate economic growth, which slowed to 3% in the previous quarter—the weakest in 14 years outside the pandemic—due to a corruption scandal in government infrastructure projects. Governor Eli Remolona Jr. emphasized that while the central bank remains vigilant against currency volatility, a slide in the peso to the ₱60-per-dollar threshold is not imminent.

Remolona stated that potential interventions would depend on the pace of the peso's decline rather than specific psychological levels. This aligns with the BSP's broader focus on stabilizing domestic demand and restoring business confidence after the graft scandal. Inflation, which rose to 2% in January—the highest in nearly a year—remains within the central bank's 2%-4% target range. The BSP projects inflation will stabilize near 3% by 2027, driven by temporary supply-side pressures and easing oil and power costs in the second half of 2026.

The cumulative rate cuts since August 2024 total 225 basis points, reflecting the central bank's prioritization of growth over immediate inflation concerns. However, Remolona signaled that further cuts may be limited, noting "not a lot" of additional monetary policy tools remain to boost growth. The Monetary Board's next policy meeting, scheduled six times annually starting 2025, will assess progress on inflation and economic recovery.

While short-term peso fluctuations are not a primary concern, the BSP's actions underscore its balancing act between supporting growth and maintaining price stability amid ongoing political and economic challenges.