BSP's tighter inflation stance pushes back hopes for rate cuts
The Bangko Sentral ng Pilipinas raised its policy rate to 5.5% and signaled possible further hikes, delaying any easing until late 2027 or later.
In Manila, the Bangko Sentral ng Pilipinas lifted its benchmark rate by 0.5 percentage point to 5.5%, emphasizing a need to curb persistent price pressures. The move caught markets off guard, as only two of twenty surveyed economists had predicted such a sizable increase. Central bank Governor Eli Remolona Jr. warned that elevated oil costs, potential wage spikes, El Niño-driven food supply issues, and a depreciating peso could sustain inflation above the 3% target.
Analysts at China Banking Corp. and Oxford Economics expect a further 25-basis-point hike in December, followed by a hold through 2027, with any easing postponed until late 2027 or early 2028. Citi projects the first cut could occur after February 2027, while Nomura flags a possible additional half-point rise in December before a smaller increase in February as global crude prices ease. The central bank projects average inflation of 6.1% this year, easing to 3.3% by 2028.
Why it matters
Higher rates could slow Philippine growth and affect regional investors.
How the sides frame it
MODERATE AGREEMENTBoth camps report the BSP’s 50-basis-point rate increase, but left-leaning coverage stresses the persistent inflation drivers and future tightening, while centrist coverage highlights the hike as a decisive, larger-than-expected response to price pressures.
LEFT
The hike is portrayed as a necessary response to stubborn inflation, a weakening peso and supply-side shocks, with analysts warning of further rate hikes and delayed cuts.
CENTER
The hike is framed as a decisive, larger-than-expected move by the BSP to combat rising inflation and price-pressure risks.
The left emphasises
- inflation jumped to 7.2% in September, well above the 3% target
- elevated oil costs, El Niño-driven food issues and a depreciating peso are sustaining price pressures
- analysts expect another 25-basis-point hike in December and a postponement of any easing until late 2027 or 2028
In this story
