BSP rate cut to spur holiday spending and loan demand, says TransUnion

By Katherine K. Chan

THE BANGKO SENTRAL ng Pilipinas’ latest interest rate cut is expected to boost consumer spending and lending activity during the holiday season, TransUnion Philippines said on Monday.

In a commentary, the credit rater said the BSP’s 25-basis-point (bp) cut earlier this month was timely as the country enters its peak retail and remittance months from September to December.

“This latest rate cut by the BSP sets the stage for a more active lending environment as we move through the ‘ber’ months,” TransUnion Philippines President and Chief Executive Officer Peter Faulhaber said.

On Oct. 9, the BSP lowered its key rate to a three-year low of 4.75%, marking its fourth straight reduction since April and bringing total cuts to 150 basis points since August 2024.

Mr. Faulhaber said the move provides “a timely boost for consumers preparing for the holidays and for lenders aiming to meet that demand.”

He added that financial institutions should use the more favorable rate environment to offer customized loan products, while maintaining sound risk management and promoting responsible borrowing.

Lower borrowing costs are expected to spur demand for credit cards, personal loans and buy now, pay later options, TransUnion said. It also expects loan delinquencies to stabilize or slightly ease as remittance inflows strengthen household repayment capacity.

Cash remittances rose 3.2% year on year to $2.98 billion in August, bringing total inflows in the first eight months to $22.91 billion, up 3.1% from a year earlier.

Analysts expect overseas Filipinos to send more money home in the coming months, supporting both consumer spending and credit repayments ahead of the holidays.