The Bangko Sentral ng Pilipinas (BSP) has lowered its key interest rate by 25 basis points, bringing the benchmark overnight reverse repurchase rate to 5.25 percent, in a move designed to support the Philippine economy amid rising global uncertainties, including the ongoing U.S.-Iran-Israel conflict.
Following the Monetary Board’s decision on June 19, the rates for the overnight deposit and lending facilities were also adjusted to 4.75 percent and 5.75 percent, respectively. These changes are effective starting June 23, 2025.
BSP is making it cheaper for banks to borrow money, encouraging them to lend more to businesses and consumers—translating to lower loan and credit card interest rates, cheaper business loans, and more money flowing through the economy.
The BSP’s Discount Window Facility (DWF)—a tool that allows banks to borrow short-term money during tight times—now comes with slightly lower peso interest rates: 6.39% for loans up to 90 days and 6.54% for loans up to 180 days.
Rates for U.S. dollar and Japanese yen loans remain unchanged.
According to the BSP, the rate cut is meant to “support domestic demand and keep credit flowing” at a time when global developments could raise the cost of goods, especially oil, and slow down economic growth.
For business owners, lower borrowing costs mean more affordable capital for expansion, inventory, or operational needs. This is especially helpful for industries like retail, real estate, and manufacturing that rely heavily on bank loans. The lower rates also allow businesses to better weather supply disruptions or price spikes stemming from global tensions.
On the other hand, consumers can expect cheaper personal loans, home loans, and credit card interest rates. It eases the burden for families paying off debts or planning big purchases, and elps boost household spending, which makes up a large part of the country’s economy.
While the Middle East conflict has not yet had a major direct impact on the Philippines, it could still affect global oil prices and trade routes. Rising fuel costs, for instance, could lead to higher transport and food prices locally.
BSP’s rate adjustment gives it more flexibility to respond quickly should the situation worsen. As inflation in the Philippines is currently easing, this move also reflects confidence that lowering rates will not trigger another spike in prices.
