MANILA (UPDATE) - The Bangko Sentral ng Pilipinas again cut interest rates in its last monetary policy-setting meeting for 2024.

The BSP slashed its benchmark target reverse repurchase rate by 25 basis points, bringing it down to 5.75 percent. The benchmark began the year at 6.5 percent.

BSP Governor Eli Remolona inflation continued to cool and stay within the 2 to 4 percent target range of the economic managers.

"On balance, the within-target inflation outlook and well-anchored inflation expectations continue to support the BSP's shift toward less restrictive monetary policy," Remolona said.

But while more rate cuts are expected next year, Remolona said the BSP no longer sees a cumulative 100 bps cut likely. This was after the BSP raised its risk-adjusted inflation forecast for 2025 to 3.4 percent from 3.3 percent in the previous meeting.

Remolona acknowledged that despite the rate cuts this year, monetary policy remains on "the tight side."

"And that for us is a kind of insurance. The reason we're cutting in baby steps is because we're not absolutely sure about inflation. We still worry that inflation might start to rise again. And by cutting in baby steps, at this point, we're still somewhat tight," Remolona said.

The BSP meanwhile said the impact of the peso's depreciation was still "modest."  The peso has been hovering near its record low of P59 to the US dollar in recent days. Remolona reiterated that the central bank does not have a target exchange rate, but they are closely monitoring the peso-dollar movements to see what their possible impact on inflation is.

"So there's kind of a threshold, and we're still trying to refine our estimates of that threshold. But at some point, if the peso keeps depreciating, it begins to have an effect on inflation," he said.

The BSP's rate cut followed the US Federal Reserve's decision to cut interest rates by a quarter point. The Fed also signaled a slower pace of cuts ahead, triggering a sharp sell-off in the financial markets.

But Remolona also said the Fed's decision does not determine the BSP's moves.

"We look at US data and Fed monetary policy only to the extent that it affects us in terms of inflation and in terms of growth. But otherwise, we focus on our own data,"  he said.