The Philippine financial market remains cautiously optimistic as we approach the end of May 2025. The Bangko Sentral ng Pilipinas (BSP) has maintained its monetary policy stance amid persistent inflationary concerns, while credit growth shows signs of cooling. Meanwhile, the peso has held steady, bolstered by strong OFW remittance inflows.
📌 1. BSP Maintains Key Interest Rate at 6.50%
In a policy decision announced Tuesday, the BSP opted to keep the overnight reverse repurchase rate unchanged at 6.50%, maintaining a hawkish tone amid lingering inflationary pressures.
BSP Governor Eli Remolona Jr. stated,
“While inflation is slowly aligning with our target, we prefer to maintain a firm stance until we observe sustained moderation across core categories.”
The latest data shows headline inflation at 3.8% in April, still within the BSP’s 2–4% target band but driven by elevated food and utility prices. Economists predict the central bank will remain cautious ahead of the June inflation print.
📊 2. Domestic Credit Growth Slows to 6.9% in Q1
According to the BSP’s Q1 2025 banking sector report, domestic credit growth slowed to 6.9% year-on-year, down from 7.6% in the previous quarter. This marks the second consecutive quarter of declining credit momentum.
Segments affected include:
- Consumer loans (especially personal and salary loans)
- Real estate loans, particularly in Metro Manila
- Micro and SME lending, where approval rates have fallen
The decline reflects higher interest rates, tighter credit standards, and cautious consumer spending behavior.
💱 3. Philippine Peso Trades Steadily at ₱55.60–55.85/USD
Despite heightened volatility in global markets, the Philippine peso continues to trade within a stable band, hovering around ₱55.60 to ₱55.85 against the US dollar in early morning trade.
Analysts credit this stability to:
- Robust OFW remittance flows
- Manageable trade deficit
- Positive sentiment in regional currencies
The peso has outperformed other ASEAN currencies like the Thai baht and Malaysian ringgit over the past two weeks.
💸 4. March 2025 Remittances Reach $3.16 Billion
BSP data shows personal remittances from Overseas Filipino Workers rose 4.1% YoY in March 2025, totaling $3.16 billion.
This uptick was driven by:
- Holy Week spending
- Preparations for the upcoming academic year
- Increased usage of digital remittance platforms
Remittance growth continues to act as a buffer for domestic consumption, especially amid tighter lending conditions.
📋 5. SEC to Release New Fintech Lending Rules in June
The Securities and Exchange Commission (SEC) confirmed on Wednesday that it is finalizing revised guidelines for digital lending platforms, focusing on:
- Stricter KYC and data transparency standards
- Borrower protection provisions
- Crackdown on predatory interest rates and hidden fees
The draft guidelines will be open for public comment in June, with full implementation expected by Q3 2025.
This move follows a rise in complaints from borrowers regarding unregistered mobile apps offering short-term loans with abusive collection practices.
🧠What to Watch This Week
| Date | Event |
|---|---|
| May 30 | BSP releases official April inflation data |
| June 1 | Annual reporting deadline for licensed lending firms |
| June 3–5 | Economic briefing by DOF and NEDA on midyear fiscal strategy |
| Next Week | BSP’s Monetary Board minutes from May meeting to be published |
✅ Final Thoughts
The Philippine financial market is entering a phase of cautious recalibration. While interest rates remain high, remittances and stable forex rates are providing some relief to households and lenders alike. With new regulatory frameworks on the horizon, the next few weeks will be crucial for fintech lenders, traditional banks, and borrowers navigating this complex landscape.