The Bangko Sentral ng Pilipinas ( BSP ) has signalled a potential rate cut in the coming months, following an improved inflation outlook amid rising concerns over global economic headwinds.

Inflation eased to 1.4% in April, down from 1.8% in the previous month, the Philippine central bank says in a statement. April’s inflation outturn is well within the 1.3% to 2.1% forecast by the BSP, and is the lowest on record since November 2019.

“On balance, the more manageable inflation outlook and the downside risks to growth allow for a shift toward a more accommodative monetary policy stance,” the central bank says, indicating a readiness to consider rate cuts in the months ahead.

The BSP attributes its earlier downward revision of its baseline inflation forecasts to the continued easing of commodity price pressures.

It also says inflation risks for 2025 to 2027 remain “broadly balanced”. While flagging potential increases in transport fares, meat prices, and utility rates, the central bank also notes that these pressures are offset by downside risks, including lower rice import tariffs and weaker global demand, which are expected to exert a moderating influence on domestic prices.

The BSP’s dovish shift comes at a time when many emerging markets are facing pressure from tight global financial conditions and slowing trade activity. While major central banks globally remain cautious and are holding interest rates steady in the face of lingering inflation concerns, the BSP’s signal of a possible rate cut marks a divergence that could boost domestic liquidity and support consumption and investment.

However, in its statement, the central bank also underscores that it will take a “measured approach” in any future easing and reiterates its commitment to a data-dependent strategy in maintaining price stability while still supporting the country’s economic growth.