A logo of the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) is seen at their headquarters in Manila, Philippines April 28, 2016. REUTERS/Romeo Ranoco/ File Photo

By Mikhail Flores and Karen Lema

MANILA (Reuters) - The Philippine central bank cut its key policy rate for a third straight meeting on Thursday and signalled that another reduction was still possible this year before it concludes its easing cycle.

The Bangko Sentral ng Pilipinas lowered its Target Reverse Repurchase Rate by 25 basis points to 5.0%, in line with expectations from all 26 economists surveyed in a Reuters poll.

The move came after data this month showed inflation eased to a near six-year low of 0.9% in July, while the economy expanded by an annual 5.5% in the second quarter, its fastest pace in a year.

"The projected inflation rate over the next year or so is where we want it to be," BSP Governor Eli Remolona said at a media briefing. "Output is moving to where we think our capacity is."

Remolona added that another rate cut was possible before year-end, though the easing cycle is nearing its close.

"That is the likely evolution of policy," he said. "But if something bad happens to output that suggests a lack of demand, then we cut some more."

He described the Philippines as being in a "sweet spot" in terms of growth and inflation.

The BSP projects inflation to average 1.7% this year, slightly above its earlier 1.6% forecast, before rising to 3.3% in 2026 and 3.4% in 2027. The central bank's target range for all years is 2% to 4%.

(Reporting by Mikhail Flores and Karen Lema; Editing by David Stanway, Martin Petty and Helen Popper)