MANILA -- The Bangko Sentral ng Pilipinas (BSP) may ease rates at a slower pace this year, a Fitch Solutions unit said Thursday.

In its latest report, BMI said it expects key interest rates in the Philippines to settle at 5 percent in 2025, or 50 basis points (bps) more than its original forecast of 4.5 percent.

The BSP cut interest rates by 75 basis points to 5.75 percent in 2024. But BMI said the BSP may slow its easing pace going forward as the United States Federal Reserve has signaled a more hawkish stance going forward.

"To be clear, we are still expecting the terminal rate to be around 4.50%. But the BSP will probably not get there in 2025," BMI said.

The Fitch subsidiary said it expects 50 bps of rate cuts in the first half of the year, then another 25 basis points in the second half.

BMI also said it expects the BSP to cut policy rates by a quarter of a point in its first meeting this year.

"Frontloading cuts in [the first quarter] will only materially impact growth later in [the second half of] 2025 due to policy lags. But given the poor economic showing in [the third quarter], policymakers will seek to unwind monetary policy settings at the earliest possible time," it said.

The Philippines' gross domestic product expanded 5.2 percent in the third quarter. Economic managers blamed El Nino and successive storms for the slower growth.

BMI also said it expects inflation to stay within the government's target of 2 to 4 percent, although price pressures may be picking up in the coming months.

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