MNI BCRP Preview – June 2025: Rate Hold Seen As Tensions Ease

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Executive Summary

• The BCRP is expected to keep its policy rate unchanged at 4.50% on Thursday, following a 25bp cut last month.
• Although CPI inflation came in below expectations in May, a de-escalation of the trade war and a pick-up in domestic growth reduces the urgency to cut further for now, especially with the policy rate already near a neutral level.
• That said, the benign inflation outlook and resilient PEN keeps the door open to further rate cuts this year, and the central bank is still seen easing a little more by some analysts in the coming months.

After cutting by 25bp last month, the Board noted that the policy rate is now approaching a neutral level. However, it continued to strike a dovish tone, leaving the door open to further easing ahead, dependent on the incoming data. Since then, CPI inflation figures surprised to the downside, while domestic economic activity rebounded in March. Meanwhile, the external backdrop has improved somewhat – although risks remain – as the global trade war has begun to de-escalate. Against this backdrop, the Board is under little pressure to ease further at this juncture, especially with eyes on the eliminated US rate differential.