Philippines: BSP seen staying hawkish on inflation – Standard Chartered

Standard Chartered economists Jonathan Koh and Edward Lee revise their Bangko Sentral ng Pilipinas (BSP) policy rate path, dropping expectations for a 50bps off-cycle hike before the 18 June meeting. They still project a 50bps increase in June and 25bps in August as inflation risks persist and PHP weakness raises imported inflation concerns. Policy easing is only expected from Q2-2027.

BSP path revised but still hawkish

"We no longer expect Bangko Sentral ng Pilipinas (BSP) to deliver a 50bps off-cycle rate hike ahead of its scheduled 18 June monetary policy meeting."

"That said, we maintain our call for a 50bps hike at the June meeting, followed by a further 25bps increase in August, as inflation risks have moderated but not disappeared."

"Continued PHP depreciation also reinforces concerns on imported inflation and supports BSP’s hawkish rhetoric."

"With the off-cycle hike no longer in our baseline, we lower our end-2026 policy rate forecast to 5.25% (from 5.75% previously)."

"We continue to expect these hikes to be reversed from Q2-2027, once inflation eases more convincingly, bringing the policy rate back to 4.50% by end-2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)