PHP: Hawkish BSP outlook and off-cycle hike – Standard Chartered

Standard Chartered economists Jonathan Koh and Edward Lee argue that the Bangko Sentral ng Pilipinas (BSP) will stay hawkish despite softer growth in the Philippines. They stress that higher inflation projections and elevated April Consumer Price Index (CPI) keep inflation at the forefront of policy. They maintain their call for a 50 bps off-cycle rate hike before the June meeting, followed by gradual easing from Q2 2027.

Inflation risks drive BSP policy path

"We think inflation concerns will dominate near-term monetary policy deliberations."

"BSP’s latest projections (in the post-April CPI report) point to a significantly higher inflation path; it had previously forecast 2026 at 6.3%, and April inflation of 7.2% y/y was above its 5.6-6.4% range."

"We maintain our call for an off-cycle 50bp rate hike before the June meeting, as BSP will likely seek to contain inflation expectations."

"However, we see rate hikes being reversed from Q2-2027 once inflation eases amid the soft growth backdrop, to return the policy rate to 4.5% by end-2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)