As the Bangko Sentral ng Pilipinas (BSP) prepares another rate cut to support slowing growth, Malaysia is holding rates steady after posting its fastest expansion in three years. The divergence highlights two very different economic cycles unfolding in Southeast Asia.
BSP Eases as Domestic Momentum Fades
The Philippine economy grew just 4.4% in 2025, well below the government’s 5.5-6.5% target and down from 5.7% in 2024. Growth slowed further to 3.0% in the fourth quarter. Inflation also ticked up to 2.0% in January 2026 after months below target, while core inflation rose to 2.8%.
Analysts widely expect the BSP to cut its benchmark rate by another 25 basis points this week, bringing it to 4.25%. That would mark the ninth reduction since August 2024.
The economic slowdown has been driven largely by weak domestic demand and stalled infrastructure spending following a major flood control scandal. Exports offered some support, but not enough to offset
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