BSP may pause rate hikes, says Deutsche Bank
The Bangko Sentral ng Pilipinas (BSP) may hold fire at its final policy meeting of the year after delivering a jumbo increase this month, German lender Deutsche Bank said, as the central bank assesses whether inflationary pressures are spreading further before deciding on additional tightening.
In a note, Deutsche Bank said the Monetary Board may keep interest rates steady at their Dec. 17 meeting.
Deutsche Bank expects the central bank to resume raising rates in February, when January 2027 inflation data will be available. This would allow the BSP to “assess whether the anticipated pickup in price pressures is materializing and warrants additional tightening.”
“We pencil in a further 25-basis point rate hike in BSP’s February 2027 MB meeting,” Deutsche Bank said.
Last week, a “strong majority” of the BSP’s Monetary Board decided to raise the policy rate by a surprise half a percentage point to 5.5 percent, citing the need for a stronger response to stubbornly high inflation.
The BSP expects inflation to average 6.1 percent this year, considerably above its 3-percent target. It further raised its inflation forecast for 2027 to 6 percent from 5.4 percent, though it expects price growth to ease to 3.3 percent in 2028.
BSP Governor Eli Remolona Jr. said policymakers were concerned about elevated oil prices, the risk of sharp wage increases and potential food supply disruptions stemming from the ongoing El Niño episode.
