BMI, a unit of Fitch Solutions, expects the Bangko Sentral ng Pilipinas (BSP) to raise policy rates by another 25 basis points (bps) this year, according to a report released Friday, April 24, 2026.
Hawkish Stance
“BSP was noticeably more hawkish and we now expect it to hike once more by 25 bps to 4.75 (percent), most likely at the June meeting,” BMI said. The Monetary Board, during its meeting on Thursday, raised policy rates by 25 basis points, noting that inflation is now projected to exceed the government’s target for both 2026 and 2027. The surge in oil prices due to the Middle East conflict will likely impact transportation costs and food prices.
Inflation Outlook
BMI said the case for another rate hike rests primarily on the inflation outlook. Headline inflation is projected to remain above 4 percent in the coming months, averaging 4.3 percent this year. In March, headline inflation rose to 4.1 percent from 2.4 percent in February, mainly due to faster inflation in transport and food commodities.
“Further inflationary pressures lie ahead. Unlike regional peers, such as Thailand, Indonesia, and Malaysia, the Philippines does not typically absorb higher energy costs as fiscal constraints hinder broad-based price caps, so increases in global energy prices pass through relatively quickly,” BMI noted.
As of April 20, gasoline and diesel prices already rose by 57.6 percent and 118.4 percent from pre-conflict levels. “Acting sooner would help to re-anchor inflation expectations before broader price pressures become more entrenched,” BMI said. “Beyond June, we expect the BSP to pause for the rest of the year. Two consecutive 25 bps rate hikes should suffice for now, given the increasingly fragile growth backdrop.”
