Standard Chartered economists Jonathan Koh and Edward Lee project that the Bangko Sentral ng Pilipinas (BSP) will maintain a hawkish monetary policy stance despite softer economic growth in the Philippines, driven by heightened inflation risks. The economists highlight that BSP’s latest projections, released after the April Consumer Price Index (CPI) report, indicate a significantly higher inflation trajectory. Specifically, BSP had previously forecast inflation for 2026 at 6.3%, and the April 2024 inflation rate reached 7.2% year-on-year, surpassing the central bank’s earlier range estimate of 5.6-6.4% [1].
Standard Chartered reiterates its expectation of an off-cycle 50 basis point rate hike by BSP before the June meeting, as the central bank aims to anchor inflation expectations in the face of persistent price pressures. The economists state, “We think inflation concerns will dominate near-term monetary policy deliberations” [1].
Looking ahead, Standard Chartered anticipates that the BSP will begin to reverse these rate hikes from the second quarter of 2027, once inflationary pressures subside and in response to the softer growth environment. The policy rate is expected to return to 4.5% by the end of 2027 [1].
No immediate market reactions or analyst opinions beyond Standard Chartered’s projections are discussed in the source article.
CONCLUSION
Standard Chartered expects the BSP to implement an off-cycle 50bp rate hike before June, prioritizing inflation control amid elevated price pressures. The central bank is projected to maintain a hawkish stance in the near term, with potential policy easing only from Q2 2027 as inflation moderates. This outlook signals a high-impact event for Philippine monetary policy and financial markets.