The Philippine central bank has warned that monetary policy is largely ineffective in curbing inflation, as price increases are being driven by external factors such as global energy price shocks and supply chain disruptions. On March 26, the central bank forecasted that inflation will average 5.1% in 2026, which is above the government's target range, highlighting persistent challenges for policymakers. The governor stated, 'Monetary policy couldn't do very much,' emphasizing the limited impact of traditional tools like interest rate adjustments under current circumstances [1].
Market analysts in the Philippines note that the elevated inflation outlook could negatively affect consumer spending and business investment, and may influence future policy decisions. The central bank is expected to closely monitor developments, with a potential shift toward fiscal and structural measures to address price stability. The sentiment remains cautious, with attention focused on external risks and their impact on the Philippine economy [1].
In the US, Rabobank analysts Philip Marey and Kan Ji attribute persistent inflation to higher global oil prices resulting from the Iran conflict. They expect US CPI to rebound in March, peak at 3.3% in April, average 2.9% in 2026, and 2.8% in 2027, only easing to 2.5% in the second half of 2028. This scenario reflects a stagflationary supply shock, with inflation remaining more persistent than previously forecasted. Rabobank's baseline scenario assumes a slow reopening of the Strait of Hormuz after fighting ends in the second half of April, which underpins their new energy price forecasts [2].
Rabobank analysts also note that the US economy, despite being a net exporter of oil and natural gas, remains sensitive to global oil prices due to the close relationship with domestic fuel prices. Their earlier simulations suggest that higher energy price trajectories could have a substantially larger upward impact on inflation and a downward impact on GDP growth [2].
CONCLUSION
Both the Philippine and US central banks are grappling with persistent inflation driven by external energy shocks, particularly those stemming from the Iran conflict. Policymakers in both countries are expected to monitor developments closely, with potential shifts toward fiscal and structural measures as traditional monetary policy proves less effective. The market outlook remains cautious, with elevated inflation likely to impact consumer behavior and economic growth.