MANILA (UPDATE) — The Bangko Sentral ng Pilipinas kept its benchmark rate steady at 5.75 percent despite inflation staying within target.

This was in contrast to analysts' expectations for the central bank to cut rates by another 25 basis points amid easing inflation and slowing economic growth.

BSP Governor Eli Remolona said the central bank needs time to recalibrate its models amid "uncertainty" in the world economy, particularly in trade policies.

"The Monetary Board noted that domestic growth prospects continue to be firm. However, uncertainty over global economic policies and their impact on the domestic economy has increased significantly," Remolona said. 

"On balance, uncertainty about the outlook for inflation and growth warrant keeping monetary policy settings steady. Before deciding on the timing and magnitude of further reductions in the policy interest rate, the Monetary Board deems it prudent to await further assessments of the impact of global policy uncertainty and the potential effects of the actual policies," the central bank chief added. 

Remolona said they would "normally" have reduced rates but the BSP was "not quite sure what the policies will be."

In recent weeks, US President Donald Trump rattled global markets by imposing or threatening to impose tariffs on goods shipped to the US by its biggest trading partners. Other countries have threatened retaliatory tariffs on US exports, while some are looking for new trading partners and trade rules amid Trump's 'America First' policies.

Remolona said the much awaited 25bps cut "is on the table" in the next BSP Monetary Board meeting in April. 

ChinaBank Securities director for research Rastine Mercado said he expects some negative reaction from some markets after the central bank kept rates steady.

 “But then again, I think one key concern heading into this year, especially with regard to foreign flows is the potential weakness in the peso. So, I mean that kind of helps in that respect.”

 “So if we do see foreign funds flow in tomorrow, then that could be a good thing,” he said.

The BSP said the risk-adjusted inflation forecast rose to 3.5 percent from 3.4 percent in its previous meeting in December. 

"The risk-adjusted forecast for 2026 is unchanged at 3.7 percent. Inflation expectations remain within the target range," the BSP added.