Standard Chartered economists Jonathan Koh and Edward Lee have revised their outlook for the Bangko Sentral ng Pilipinas (BSP) policy rate, removing the expectation of a 50 basis point (bps) off-cycle hike before the scheduled 18 June monetary policy meeting [1]. Despite this adjustment, the economists maintain their projection for a 50bps rate hike at the June meeting, followed by an additional 25bps increase in August, citing ongoing inflation risks and concerns over the depreciation of the Philippine peso (PHP), which could exacerbate imported inflation [1].
The economists note that while inflation risks have moderated, they have not disappeared, justifying the continued hawkish stance of the BSP [1]. The persistent weakness of the PHP is highlighted as a key factor reinforcing the central bank's cautious approach [1]. As a result of removing the off-cycle hike from their baseline, Standard Chartered has lowered its end-2026 policy rate forecast to 5.25%, down from the previous estimate of 5.75% [1].
Looking ahead, Standard Chartered expects policy easing to commence only from the second quarter of 2027, once inflation shows more convincing signs of easing. The policy rate is projected to return to 4.50% by the end of 2027 [1].
CONCLUSION
Standard Chartered's revised outlook underscores the BSP's continued hawkish stance in response to persistent inflation risks and PHP depreciation. Policy rate hikes are expected in June and August, with easing only anticipated from Q2-2027, reflecting a cautious approach to inflation management.