The Bangko Sentral ng Pilipinas (BSP) is widely expected to raise its key interest rate by 25 basis points during its upcoming meeting on June 18, 2026. This decision comes as policymakers strive to tackle ongoing inflationary pressures, even after a slight easing in consumer price growth.
Analysts Predict a Quarter-Point Increase
The softer inflation reading likely removed the need for a more aggressive move.
Miguel Chanco, Chief Emerging Asia Economist, Pantheon Macroeconomics
- Seven out of nine economists predict a 25-bps increase to 4.75%.
- Two analysts foresee a larger 50-bps hike due to inflation risks.
Inflation in May decreased to 6.8% from April's 7.2%. However, this figure remains above the BSP's target range of 2.0% to 4.0%. The moderation was attributed to lower transport costs and slower price growth in housing and utilities.
Despite the easing, economists emphasize that price pressures are still building. The BSP has stated it will take necessary actions to ensure inflation aligns with its target.
Deepali Bhargava, regional head of research at ING Economics, highlighted that food prices remain a significant driver of inflation, noting that risks are skewed to the upside. ING forecasts an average inflation rate of 5.8% for the year.
Some economists advocate for a more aggressive strategy. Jonathan Koh from Standard Chartered Bank predicts a 50-bps increase, citing persistent inflation concerns despite signs of economic stagnation.
The BSP's approach reflects a delicate balance between curbing inflation and supporting economic growth. Analysts warn that aggressive rate hikes could dampen loan demand and consumer spending, potentially stalling the economy.
This week's anticipated rate hike marks a critical juncture for the BSP as it navigates the complex interplay of inflation pressures and economic stability.